Iran tax residency: the six-month rule is the least of your problems
Who counts as Iranian tax resident, the 15-25% bands, what foreign staff and returning diaspora face, and why the tax is the easy part. Verdict inside.
US correspondentSeptember 20267 min readOur Iran tax page is one of the most-read things we publish, in English and in Russian. People read it because they hold an Iranian passport they never chose, or because an employer has offered a contract in Tehran, and they want to know what the tax office will do about it. Here is the honest version: tax first, walls second.
Who is resident: the rule runs backwards
Most countries start from zero and count you in after 183 days. Iran's Direct Taxes Act starts from the passport and counts you out only if you can prove otherwise.
Article 1 draws the perimeter. An Iranian national living in Iran is taxed on worldwide income. An Iranian national living abroad is taxed on Iranian-source income. A non-Iranian, natural or legal, is taxed on income earned in Iran and on income collected from Iran: licence fees, technical assistance, training, film rights.
Article 180 is where the six-month test lives, and note the direction it runs. An Iranian is treated as domiciled abroad only if they produce a certificate, obtained through Iran's own financial or diplomatic missions, showing they paid tax as a resident of another country that year. Even then, three things pull them back into the worldwide net: an occupation in Iran during the year; six months in the country, consecutive or not; or a stay abroad that counts as a mission, medical treatment "and the like".
The burden of proof is on you, and the paperwork runs through the Iranian consulate.
For foreigners the statute is source-based; the worldwide clause is written for Iranian nationals. The tax year runs from 21 March to 20 March, and a contract straddling two of them can cross the six-month line twice.
The rates: the mildest part of the story
Individual rates under Article 131, as amended in 2015, run in three bands: 15%, 20% and 25%. That 25% is the top marginal rate, and a note in the same article shaves a point off it for every tenth of extra income you declare, up to five points.
Salaries are carved out: a tax-free allowance set in each year's budget law, then 10% up to seven times that allowance and 20% above. In practice the annual budget law substitutes its own stepped scale, starting at 10% and historically topping out around 30–35%.
| Income type | Rule in the Act | Rate |
|---|---|---|
| General individual income | Article 131, three bands | 15% / 20% / 25% |
| Salary | Allowance, then a stepped scale set by the annual budget law | 10% rising to roughly 30–35% |
| Rental income | Taxed after a flat 25% deduction for costs | Article 131 bands |
| Sale of real estate | Transfer tax on the official "transactional value", not the price | 5% |
| Listed shares | Levy on sale value; no capital-gains tax in the Act | 0.5% |
| Company profits | Article 105 | 25% |
| Inheritance, first-degree heirs | By asset class; second-degree heirs pay double, third-degree quadruple | 3% on deposits, 2% on vehicles, 10% on foreign assets |
Note what is absent from the Act: no general capital-gains tax on securities or property (a separate capital-gains tax law has been before the Majlis since 2023; check whether it is in force). The state takes a slice of the transaction instead, and the property slice is charged on a government valuation far below market. On paper this is a moderate, old-fashioned code. That is not the problem.
Foreign employees: the deemed salary and the exit permit
Three mechanisms shape a foreign employee's year.
Withholding. Your employer deducts salary tax monthly and reports the payroll to the local tax office under Article 86.
Deemed salary. The tax administration has historically applied notional salary tables for foreign staff by nationality and job grade. Where an employer cannot or will not document the real package, the table is what gets taxed.
The exit permit. Article 89 makes the grant of an exit permit, or the extension of a residence or work permit for a foreign national, conditional on a tax clearance or a written undertaking from the Iranian employer. Article 202 lets the tax administration bar from leaving the country individuals whose tax debt exceeds a statutory threshold, with higher, capital-linked thresholds for businesses. Your departure is a tax event.
Returning diaspora: the passport you cannot put down
Iranian law — Article 989 of the Civil Code — treats you as Iranian whatever other passport you carry. A Toronto or Los Angeles dual national who goes back for a year to settle a parent's estate is, on the statute, an Iranian resident with worldwide income, unless they hold the Article 180 certificate, did no work in Iran and stayed under six months.
Enforcement is uneven. Iran has no automatic exchange of financial-account information (more below), so the tax office learns about your Toronto brokerage account only if you tell it. It does not need Toronto. It needs Tehran: the apartment sale that cannot be notarised without a tax clearance under Article 187, the inheritance share taxed on transfer, and the airport, where Article 202 applies.
One genuine relief: the note to Article 180 grants a unilateral foreign-tax credit for the lower of the tax paid abroad or the Iranian tax on that income. Declare and you are credited. Do not, and you carry a domestic tax debt to the departure gate.
The wall around the tax system
No CRS. Iran appears nowhere on the OECD's status-of-commitments list for automatic exchange, not even among the developing countries that have yet to set a date. A bank in Zurich or Dubai that sees an Iranian tax residence on your self-certification sees a jurisdiction it cannot exchange with, which in most compliance departments means one it will not onboard.
FATF countermeasures. Iran has sat on the FATF's call-for-action list, with a standing call for countermeasures, since February 2020, and every plenary statement since has reiterated it. For Western institutions, correspondent banking to and from Iran is closed.
UN snapback and the 2026 war. At the end of September 2025 the Security Council's earlier sanctions resolutions were re-applied under the snapback mechanism of resolution 2231. Hostilities followed in early 2026, and resolution 2817 condemned Iranian attacks on seven neighbouring states. My view: it would be naive to expect the Gulf banking corridor that many diaspora families relied on to work as it did before.
Remittances for US persons. The quiet channel for Iranian-Americans was 31 CFR 560.550, the general licence for non-commercial personal remittances to and from Iran through US banks. On 24 August 2026 OFAC suspended it indefinitely, with a wind-down licence (General License BB) that expires at 12:01 a.m. EDT on 8 September 2026 — effectively the end of 7 September, two days after this piece is published. The same action identified Iran's aviation, digital-asset, gold, shipping and technology sectors under Executive Order 13902. Read that as a warning to anyone routing family money through stablecoins.
Treaties that exist on paper
Iran has several dozen treaties, heavy on Europe, Central Asia, Russia, China and Türkiye. Two absences matter more than any presence. The United Kingdom has no comprehensive treaty with Iran; HMRC lists only a 1960 air-transport agreement that provides no tax credit. The United States has none at all.
| Counterparty | Treaty | What it is worth in practice |
|---|---|---|
| Germany, France, Austria, Switzerland, Spain, Poland | Yes | Credit rules exist; money and certificates still have to move through a bank |
| Russia, China, Türkiye | Yes | The corridors where treaty and banking both function |
| United Kingdom | No, air transport only | Unilateral relief at home; Article 180 credit in Iran |
| United States | No | The sanctions regulations govern; treaty relief is irrelevant |
A treaty only works if you can pay tax in both places, obtain certificates from both administrations and receive a credit through a bank willing to touch the transaction. That chain breaks at the bank.
Verdict
The Iranian tax code is not the enemy. A 25% top rate, no capital-gains tax on securities in the Act, a property transfer tax charged at a fraction of market value and a unilateral foreign-tax credit would count as competitive in a normal country.
Iran is not bankable, and no tax structure fixes that. For foreign employees: treat the exit permit as your real filing deadline, get the tax clearance before the contract's last month, and assume the deemed-salary table applies. For returning dual nationals: stay under six months, take no paid work, get the Article 180 certificate through the consulate before you travel, and settle every domestic tax matter before you head to the airport. For anyone with a Western passport wondering whether Iran could be a tax residence of convenience because it sits outside CRS: it cannot. You would trade exchange of information for exclusion from the banking system, the worst trade on this site.
Our full reference is on the Iran tax page; the wider picture is in the Iran guide.
The full, dated reference for this: Iran: tax at a glance.
Frequently asked
Who is considered a tax resident of Iran?
Under Article 1 of the Direct Taxes Act, Iranian nationals living in Iran are taxed on worldwide income, Iranian nationals living abroad on Iranian-source income, and non-Iranians on income earned in or collected from Iran. Article 180 supplies the residence test, and it runs in reverse: an Iranian national is treated as domiciled abroad only if they prove, through Iran's financial or diplomatic missions, that they paid tax as a resident of another country that year, and not if they had an occupation in Iran, spent six months or more in Iran (consecutive or not) in the tax year, or were abroad on a mission, for medical treatment or similar. The tax year runs from 21 March to 20 March. For foreign nationals the statute is source-based rather than residence-based.
What are Iran's personal income tax rates in 2026?
Article 131 of the Direct Taxes Act, as amended in 2015, taxes individual income in three bands of 15%, 20% and 25%, with a note cutting the rate by one point for every 10% increase in declared income over the previous year, up to five points. Salaries follow a separate scale: a tax-free allowance fixed in each year's budget law, then 10% up to seven times that allowance and 20% above under the Act itself; in practice each annual budget law substitutes a steeper stepped scale that starts at 10% and has historically topped out around 30–35%. Company profits are taxed at 25%. Rental income is taxed under Article 131 after a flat 25% deduction. Real estate transfers carry a 5% tax on the official transactional value rather than the sale price, and listed-share sales a 0.5% levy.
Does Iran participate in CRS or automatic exchange of information?
No. Iran does not appear on the OECD's status-of-commitments list for the automatic exchange of financial account information in any category: neither among jurisdictions that have committed to a first-exchange year nor among developing countries that have not yet set a date. It has no FATCA agreement with the United States either. Practically this means Iran neither sends nor receives account data under the OECD standard. It does not make Iran a privacy haven: the FATF has called for countermeasures against Iran since February 2020 and has reiterated the call at every plenary since, so banks in participating jurisdictions treat an Iranian tax residence as a high-risk flag rather than a reason to relax.
How are foreign employees taxed in Iran?
Foreign nationals are taxed on income earned in Iran. Salary tax is withheld monthly by the employer, which must compute the tax and report the payroll to the local tax office. The tax administration has historically applied deemed-salary tables by nationality and job grade; where the actual package is not documented, the table is used as the taxable base. Under Article 89, the grant of an exit permit or the extension of a residence or work permit for a foreign national depends on a tax clearance certificate or a written undertaking from the Iranian employer, and Article 202 allows the tax administration to prevent tax debtors above a statutory threshold from leaving the country. Obtaining the clearance before the contract ends is essential.
Does Iran have a double taxation treaty with the UK or the US?
No comprehensive treaty with either. HMRC's Double Taxation Relief Manual records that there is no comprehensive double taxation agreement between the United Kingdom and Iran; the only instrument in force is a 1960 agreement covering air transport, which does not provide for tax credit. The United States has no income tax treaty with Iran, and US dealings with Iran are governed by the Iranian Transactions and Sanctions Regulations. Iran does have treaties with several dozen countries, including Germany, France, Austria, Switzerland, Spain, Poland, Russia, China, Türkiye, Pakistan and South Africa. UK and US residents with Iranian-source income must rely on unilateral relief at home, and Iranian residents with foreign income on the foreign-tax credit in the note to Article 180 of the Direct Taxes Act.
Can Iran tax a dual national who lives abroad?
Iranian law treats an Iranian national as Iranian whatever other citizenship they hold, so the Direct Taxes Act applies to a dual national exactly as to any other Iranian. Living abroad, they are taxed only on Iranian-source income, provided they can show, through an Iranian financial or diplomatic mission, that they paid tax as a resident elsewhere, and provided they had no occupation in Iran and spent under six months there in the tax year. Cross any of those lines and the statute treats them as resident with worldwide liability, with a credit for foreign tax under the note to Article 180. Enforcement abroad is weak because Iran has no automatic exchange of information, but domestic leverage is strong: tax clearance is needed to notarise property sales, inheritance shares are taxed on transfer, and tax debtors above a statutory threshold can be barred from leaving the country.
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