National Treatment

DEFINITION of 'National Treatment'

A concept of international law that declares if a state provides certain rights and privileges to its own citizens, it also should provide equivalent rights and privileges to foreigners who are currently in the country. This concept of equality can be found in bilateral tax treaties and also in most World Trade Organization agreements.

BREAKING DOWN 'National Treatment'

For example, if country A provides special tax breaks for its fledgling pharmaceutical industry, all pharmaceutical companies that have operations in country A will be entitled to the tax breaks, regardless of whether the company is domestic or foreign.

In some situations, national treatment may not be such a great thing. For instance, suppose that a state has a law that allows it to expropriate property. Under national treatment, a foreign firm would technically still be subject to the expropriation law. However, depending on the country, other laws may exists that could limit national treatment to only the upside benefits.

RELATED TERMS
  1. Tax Treaty

    A bilateral agreement made by two countries to resolve issues ...
  2. Bilateral Trade

    The exchange of goods between two countries. Bilateral trade ...
  3. IRS Publication 901

    A document published by the Internal Revenue Service (IRS) that ...
  4. Expropriation

    The act of taking of privately owned property by a government ...
  5. Bilateral Tax Agreement

    An arrangement between two jurisdictions that mitigates the problem ...
  6. IRS Publication 597

    A document published by the Internal Revenue Service (IRS) that ...
Related Articles
  1. Investing

    What Taxes Do I Owe On Retirement Accounts Abroad?

    If you're a U.S. retiree, but previously worked abroad, here's what you need to know about taxes on foreign pensions and retirement accounts.
  2. Personal Finance

    Understanding Taxation Of Foreign Investments

    Technically, any gains from foreign investments owned by an American citizen are subject to tax by the company's home country as well as the IRS. However, the Foreign Tax Credit enables you to ...
  3. Financial Advisor

    Advisors: Don’t Overlook This Foreign Dividend Tax

    Paying income tax on income earned from foreign investments can be a tricky proposition. Here's what advisors and their clients need to know.
  4. Personal Finance

    Is It Smart To Get Dual Citizenship?

    When does it make sense to be a citizen of the U.S. and somewhere else? Here are the plusses and negatives of a dual citizenship.
  5. Investing

    How Property Rights Affect Economies

    Property rights are laws governments create that enable investors to control, benefit from, and transfer property.
  6. Financial Advisor

    Tax-Efficient Strategies For International Clients

    In a globalized world, international clients seek to diversify holdings by accessing U.S. markets. Creative strategies will help optimize tax positioning.
  7. Managing Wealth

    The Top 10 European Tax Havens

    While the popular stereotype of a tax haven is a Caribbean island, these countries in Europe serve as attractive places for foreign individuals and companies to store funds.
  8. Markets

    5 Economic Effects Of Country Liberalization

    Liberalization provides new opportunities for diversification and profit.
  9. Personal Finance

    When Is Dual Citizenship Not A Good Idea?

    It may sound useful, but there are a number of reasons that make dual citizenship a questionable choice.
  10. Personal Finance

    Explaining Corporate Tax

    A corporate tax is a tax levied on the profits a corporation generates.
RELATED FAQS
  1. Can the government tax your capital gains from other countries?

    Learn more about how capital gains earned in foreign countries are treated by the IRS. Discover examples of special tax situations ... Read Answer >>
  2. What are the tax incentives or disincentives to vertical integration?

    Merging companies through vertical integration can provide companies in the United States with a marginally advantageous ... Read Answer >>
  3. What nations are actively recruiting FDI (foreign direct investments)?

    Understand the concept of foreign direct investments, and learn which countries most enthusiastically pursue investments ... Read Answer >>
  4. What does it mean when a country has little activity in its capital account?

    Know what a country's capital account represents and understand what the implications are if a country has little activity ... Read Answer >>
  5. What does the law say about non-U.S. citizens buying stocks of U.S. companies? Are ...

    The law is very fuzzy on the matter of who may own U.S. securities and for what purpose. The U.S. follows the common law ... Read Answer >>
  6. How do businesses decide whether to do FDI via green field investments or acquisitions?

    When businesses decide to expand their operations to another country, one of the more important dilemmas they can face is ... Read Answer >>
Trading Center