No Treaty? Expat US Tax Has Your Back Abroad

If you’ve ever heard someone casually mention, “Oh, there’s no U.S. tax treaty with that country,” you’ve probably felt that tiny jolt of panic most Americans abroad get at least once. It sounds like a warning label, like you’re automatically walking into double taxation or some kind of IRS quicksand. And honestly, I get why people think that. Treaties feel like safety nets. When they’re not there, you start imagining worst-case scenarios.

But here’s the thing most expats don’t realize until they dig a little deeper: living in a non-treaty country doesn’t mean you’re stuck. Not even close. In fact, a lot of Americans in places like the UAE, Qatar, Kuwait, Hong Kong, and Singapore end up in better tax positions than expats in treaty countries. The system is just… different. And once you understand how the pieces fit together, the fear melts away pretty quickly.

What does a tax treaty actually do?

Before going further, it helps to get a realistic sense of what you’re even missing.

Tax treaties usually cover a few main things:

• preventing double taxation on income,
• clarifying where you’re considered a tax resident,
• deciding how pensions or business income will be treated, and
• cutting down withholding rates on certain payments.

It’s a helpful framework, but not the backbone of expat tax relief. That part comes from U.S. domestic law, which applies whether a treaty exists or not. FEIE, the Foreign Tax Credit, the housing exclusion… all of those remain firmly in place.

So yes, you lose some treaty-specific perks. But the core protections most expats rely on? Those don’t disappear.

The good news: zero-tax hubs actually pair really well with U.S. rules

The irony here is almost funny: the places with no treaty are often the same places with no income tax at all. Which means the entire “double taxation” problem isn’t even on the table.

Take the UAE. An American earning, say, $120,000 in Dubai isn’t paying income tax locally. If they qualify for the Foreign Earned Income Exclusion (and they usually do), nearly all of that income gets wiped off their U.S. taxable base. Add the housing exclusion covers rents in Dubai, and suddenly the remaining U.S. tax liability drops even further.

You don’t need a treaty to make that work. You just need the right combination of exclusions.

What tools can you still use without a treaty? (Pretty much all the big ones.)

Foreign Earned Income Exclusion (FEIE)

Up to $130,000 excluded for 2025. The Physical Presence Test is straightforward if you’re spending most of your time abroad. Even contractors hopping between Gulf states usually qualify.

Foreign Housing Exclusion

Rents in Doha, Dubai, or Singapore can eat half your paycheck if you’re not careful. Luckily, those costs are often deductible under the housing exclusion. It’s one of the few relief tools that gets better the more expensive your city is.

Foreign Tax Credit (FTC)

If you invest globally or receive dividends, you might still face foreign withholding taxes. FTC wipes out the U.S. tax on that income so you’re not taxed twice.

Smart structuring for freelancers

Self-employed expats don’t get the Social Security relief treaties normally provide. And yes, that means U.S. self-employment tax can hit hard. However, with the right entity structure (especially for Gulf-based consultants), you can avoid unnecessary exposure.

What are the real challenges of living in a non-treaty country?

Not everything is rosy. A few things genuinely get trickier:

• Foreign pensionsoften lack treaty protection, so the IRS treats them unfavorably or as foreign trusts.
• Investment products, especially foreign funds or offshore “savings plans,” can trigger PFIC rules (not fun).
• Business ownershipin free zones can trigger Forms 5471, 8858, or 8865 even when the business barely operates.
• No residency tie-breakermeans you must rely on FEIE or FTC, not a treaty, to avoid double taxation.

But none of these issues are unsolvable. You just need to know where the pitfalls hide.

How to avoid double taxation without any treaty at all

Most Americans abroad manage perfectly well with three simple habits:

1. Use FEIE + housing exclusion correctly(especially in high-rent cities).
2. Claim FTC on investment or multi-country income.
3. Track travel days carefullyso you don’t accidentally fail the Physical Presence Test.

With those in place, genuine double taxation is rare.

Need help untangling things? Expat US Tax is built for non-treaty countries

If you’re in the Gulf, Asia, Africa, or anywhere the U.S. doesn’t have a treaty, you’re not alone. Expat US Tax works with thousands of Americans in exactly these situations: people navigating housing allowances, free-zone companies, expat pensions, PFIC-heavy investment products, or years of unfiled returns.

Whether you need a full annual return or a sanity check before making big financial decisions abroad, there’s a team that already knows the playbook.

No treaty? No problem. You’ve still got options and you’ve still got support.