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home | Double Tax Treaties

Using Double Tax Treaties to avoid UK Tax

tax planning strategies with double tax treatiesDouble tax treaties are agreements between different countries that apply to determine which country shall tax certain forms of income and gains. The provisions though are much wider than this, and they can also be used to determine an individuals or company's tax residence.

The need for double tax treaties arises because many countries tax both the income of their residents as well as any income arising in their borders. So a resident in one country (France) may be taxed by France on his worldwide income. However if some of his income arose in the UK, the UK may also want to tax the income arising within the UK. This could lead to the same income (ie the UK income) being taxed twice. This is where double tax treaties come into play, and they could provide for either an exemption from tax in one of the country's or a tax credit to offset against the other country's tax liability.

This section includes articles that cover the use of double tax treaties.

Join up today to read unique tax planning articles and obtain online tax guidance on using double tax treaties

Free Double Tax Treaty Articles
The Benefits of Double Tax Treaties
Double tax treaties offer some substantial benefits to individuals and businesses that have international income. In this free article we look at how double tax treaties operate together with some ini . . . keep reading

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Articles on Double Tax Treaties

Where is your pension taxed?
Where is your pension taxed? If you're receiving a pension from overseas it's important to be able to establish in which country it is taxed. As a UK resident you are usually taxed on your worldwide income, which would include a pension from overseas. However the terms of double tax treaties can significantly impact on this. This article shows you how to determine in which country your pension will be taxed wherever it is paid. . . . keep reading
Tax residence certificate for UK agency company - USERNAME: rocky - 10/03/2014
Tax Question: HI, Can a UK Agency company get a Tax resident certificate? What should be provided or what are the criteria? Thanks . . . keep reading
Offshore trusts for grandchildren to avoid UK income tax and CGT
Offshore trusts for grandchildren to avoid UK income tax and CGT The options available to UK residents to successfully use offshore trusts to avoid UK tax have been significantly reduced over the past few years due to the scope of the anti avoidance rules in place. This article looks at how offshore trusts for grandchildren can still be used tax efficiently by UK residents. . . . keep reading
Can a UK resident/Spanish treaty resident individual avoid UK CGT? - USERNAME: charliebrown - 13/02/2014
Tax Question: An individual is resident in the UK under domestic legislation but resident in Spain under the double tax treaty. If they sell a UK property [no PPR], are they considered non UK resident per the treaty and therefore not subject to capital gains tax? . . . keep reading
Tax relief for property investors on overseas interest and finance costs.
Tax relief for property investors on overseas interest and finance costs. If you're borrowing money from overseas to invest in property you need to assess firstly what level of tax deduction you'll be entitled to for the interest and secondly whether you'll be caught by the withholding tax rules. If you are caught by the withholding tax rules you'll also need to consider what options you have to avoid having to pay 20% of the interest to UK HMRC. This article tells you what you need to know to avoid UK withholding taxes on overseas interest. . . . keep reading
German employee and UK tax return? - USERNAME: charliebrown - 22/01/2014
Tax Question: For the 2012/13 tax year, a German resident taxpayer came to the UK for 100 days and performed employment duties in the UK during these 100 days. He remained tax resident in Germany and had German taxes deducted from his salary. His employer is a German company that does not have an establishment etc in the UK. I understand that he should benefit from the treaty exemption re employment income on the basis that he was in the UK for less than 183 days, however should he complete a UK self-assessment return in order to report this UK source income claim the treaty exemption [even though he is non-resident for UK income tax purposes]? Many thanks in advance. . . . keep reading
CGT on disposal of UK property by French resident - USERNAME: taxexplorer - 10/01/2014
Tax Question: A couple become UK non resident and non ordinary resident from 6 April 2008, moving to France in the tax year 2007/08. Prior to that, they were UK resident and ordinary resident. They sold their UK property [purchased while resident in the UK] in the tax year 2012/13. The five year rule in CGT means that the couple will not be liable to CGT in the UK on the disposal of UK properties. Question: 1] I am assuming, based on the simple facts, that the disposals could be potentially liable to tax in France? 2] Considering the high taxes in France, is there a way of making the disposals chargable to UK taxation? Thanks . . . keep reading
Using an intermediary company to reduce withholding tax
Using an intermediary company to reduce withholding tax Double tax treaties frequently provide for lower rates of withholding tax on dividends, interest and royalties. To take advantage of this, it can often be attractive to set up a company in a suitable treaty jurisdiction to receive the income and benefit from these lower withholding tax rates. This article looks at recent guidance issued by HMRC that consider how they will determine whether an overseas company is genuinely beneficial entitled to the income for tax treaty purposes . . . keep reading
Tax return and PAYE for non resident under tax treaty? - USERNAME: charliebrown - 16/12/2013
Tax Question: A German company is completing a construction project in the UK which will last 4 months. It is sending it's own employees to the UK, none of whom are resident in the UK and they will only be present in the UK for 4 months whilst the project is completed. As far as I can see exemption from UK income tax will apply in accordance with the employment article in the double tax treaty, but I'm not sure if there are any compliance requirements, ie: - 1. Would the employees need to declare their UK income and then make a claim for treaty relief? 2. Are there any PAYE requirements / procedures that need to be followed [the Germany company does not have a presence in the UK]? Many thanks for any clarification. . . . keep reading
Deemed domicile and the UK-India estate tax treaty - USERNAME: msd - 12/12/2013
Tax Question: Sorry but in reference to my previous question regarding UK/India DTA, I am still confused as to whether under the DTA rule to disregard UK deemed domicile is mandatory or matter of choice so as not to have it applied. Can I be a non-uk domicile for income tax\cgt and still choose to be deemed domicile for UK IHT despite the UK/India DTA? Many thanks . . . keep reading
UK-India estate tax treaty and UK inheritance tax - USERNAME: msd - 11/12/2013
Tax Queston: If I am an Indian domicile under the general law for income tax and CGT, but deemed UK domicile for IHT, does the UK/India DTA apply automatically or can I choose for it not to apply and be treated as deemed UK domicile. In other words, is the UK/India DTA application mandatory? The relevance of this is because I want to claim remittance basis for one tax year as a non UK domicile but also be able to rely on UK/US DTA to make a gift of US located etf's valued well over $60k to my daughter who is a US person. I am not a US person. Would the UK/US DTA application revert the right to UK and the gift be treated as PET for UK IHT purpose or does the ignore UK deemed domicile from UK/India DTA over rule this and the US gift is subject to US gift tax? . . . keep reading
Corporation tax for UK company with no UK trade and controlled from overseas? - USERNAME: rocky - 22/11/2013
Tax Question: Hi, A uk company which does not trade in the UK and its management/control is outside the UK can they be exempted from Corporation tax? thanks . . . keep reading
Can you use a UK agency company to trade in the UK tax free?
Can you use a UK agency company to trade in the UK tax free? We've looked in a previous article at how the UK taxman treats offshore companies providing goods or services in the UK. Now we're going to look at one particular aspect of this, namely how having a UK agent to act on your behalf can impact on any UK tax liability. This article is a Platinum/Practitioner Members article . . . keep reading
Foreign income taxed twice - what relief is available? - USERNAME: r101 - 19/11/2013
Tax Question: I have a holding in an offshore fund [non reporting] and am currently non UK resident. Gains within this fund are taxed as income in my current tax residence yearly, whether or not this income is distributed from the fund. I may become UK resident in the future. My understanding from the UK side is that income/gains within the fund are all taxed as income but only when distributions actually occur. Therefore am I potentially exposed to tax twice on income within the fund, once in my current residence on undistributed income and secondly in the UK were a distribution of this income to occur after gaining UK tax residence? Is their any mitigation or strategies in place for minimising this effect, such as a base cost uplift at time of change of residence? Regards . . . keep reading
Move to New Zealand and UK corporation tax - USERNAME: bluesky - 08/11/2013
Tax Question: Hi I'm a director of UK company recently moved to NZ and become NZ tax resident. I assume i need to let companies house know this. Are there any tax implications i should be aware of? I am entitled to 4 years tax relief in NZ but UK company still paying uk tax Thanks . . . keep reading
Liable to UK income tax or not? - USERNAME: asne - 14/10/2013
Tax Question: Dear Sir/Madam, I am considering of becoming an online tutor working from my country [Slovakia] for a company in England. Before making a decision I have to consider the following questions. I would like to know whether I would have to pay income tax and insurance deductions in my country or in UK. Furthermore, I have found out that Slovakia has a double tax treaty with UK, but I am not sure which of the categories of activities specified in the treaty online tutoring belongs to. Thank you very much for your help. . . . keep reading
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