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.

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Articles on Double Tax Treaties

Offshore trusts for grandchildren to avoid UK income tax and CGT Offshore trusts for grandchildren to avoid UK income tax and CGT
29/01/2016
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

Tax treatment of UK resident shareholders in Spanish company - USERNAME: malibu - 31/12/2015
Tax Question: Hi there, A trading company is set up in Spain, the sole purpose of this company is to grow and eventually be sold. There are 8 share holders, 2 Brits (each owning 5% o the company), 1 from the US and 5 from Spain. When the company is sold, will the brits benefit from UK Entrepreneurs relief, or will they have to pay tax in both Spain and the UK? If so, do you have any ideas of how plan ahead for this? keep reading

Tax paid under Swiss "fait fiscal" and UK double tax relief - USERNAME: rodbin - 31/12/2015
Tax Question: Hi I have returned to the after 5 years in Switzerland, I still have my B permit which I want to hold onto for a few months as I am building a new chalet and there is problems with building "second homes". I am paying Swiss tax under "fait fiscal" I realise I will be considered UK resident now as I have bought a House in the UK. Is the tax I pay in Switzerland deductible under the dual tax agreement ? keep reading

Change in HMRC practice on treaty residence Change in HMRC practice on treaty residence
15/12/2015
In this article we look at the recent change in HMRC practice for dual resident companies under the terms of certain double tax treaties keep reading

French government pension taxed in UK or France? - USERNAME: revsusi - 08/12/2015
Tax Question: I have a pension from France for service in higher education, working for the French government. By treaty, I believe this is taxable in France rather than the UK, where I am tax resident. Is that a correct interpretation of the treaty? As this is my only French income, I would owe no tax, but do I have to report all my income in France if I want to be taxed there for this small part? keep reading

Tie breaker rules in the UK-Ireland double tax treaty - USERNAME: opoczno - 06/11/2015
Tax Question: Hi, I was wondering if you knew what the 'tie breakers' are for the UK/Ireland Double tax treaty? keep reading

Non doms, the personal allowance and double tax treaties - USERNAME: Kazv - 28/10/2015
Tax Question: I know that persons who are non-domiciled in the UK and claim tax on a remittance basis are NOT entitled to benefit from Personal Allowance? Are there any exceptions to this? Are nationals of certain countries nevertheless allowed to benefit from the allowance? On inheritance tax, are insurance proceeds received on death themselves subject to inheritance tax? Thanks keep reading

Where is your pension taxed? Where is your pension taxed?
28/10/2015
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

UK tax on sale of US property? - USERNAME: PAULR - 19/10/2015
Tax Question: Am a UK Tax Resident and am considering investing in a residential property in the Florida, expecting both Income and Capital Gains. If I am still UK resident when I sell the property, is the capital gain fully taxable in the UK or is there any tax treaty relief or other form of relief to reduce the tax charge? keep reading

Tax treaties and the new deemed domicile rules from April 2017 Tax treaties and the new deemed domicile rules from April 2017
16/10/2015
Recent proposals to amend the tax treatment of non UK domiciliaries bring in big changes to how they are treated for UK tax purposes. In this article we look at how the terms of double tax treaties will impact on these proposals keep reading

Avoiding a PE for a construction site? - USERNAME: rocky - 15/10/2015
Tax Question: Hi, An italian company is undertaking construction work in the UK. They are also register under CIS scheme both as contractor and subcontractor. Question: 1. will the Italian company be subject to Uk corporation tax if the contract is under 12 months? 2. will the Italian company be subject to Uk corporation tax if the 1st contract is 10 months and a 2nd separate contract of 5 months (starting after the 10 month) ? Thanks keep reading

Using a UK company in offshore tax planning Using a UK company in offshore tax planning
08/10/2015
Non UK residents looking to structure investments both in the UK and overseas may look to use a UK limited company as an intermediary for their overseas investments. This article looks at when and how using a UK company could be effective in reducing taxes on investments. keep reading

How A UK Company Can Escape UK Tax By Using Double Tax Treaties How A UK Company Can Escape UK Tax By Using Double Tax Treaties
26/08/2015
Double tax treaties aren't only relevant for individuals they also apply to companies. One of the most important aspects of a double tax treaty is the tie breaker provision. This applies in the context of an individual where he or she is resident both in the UK and overseas and it then provides for various rules that determine which of the two countries they will be classed as resident in. keep reading

Does pension have to be subject tax in Malta for double tax treaty relief? - USERNAME: black1 - 14/08/2015
Tax Question: Hi, I am a non UK resident/ordinary resident who will shortly be taking a non governmental pension, remitted to my country of residence, Malta where under the double taxation agreement it will be taxed. Does the UK inland revenue require that the pension be transferred to Malta immediately or could it be delayed (and for how long) in an offshore bank? NB the accounting years of Malta/UK are not coincident keep reading

Tax on foreign interest with the remittance basis and double tax treaty - USERNAME: tonio19 - 08/07/2015
Tax Question: Hi, The double tax treaty between France and UK make sure that a UK non dom under tax remittance basis ends up paying taxes on interests earned in France (but no CGT in either country). What is the situation on the US-UK double tax treaty? no tax on interests and no CGT in either country? Thanks keep reading

How to claim double tax relief on UK pensions received overseas How to claim double tax relief on UK pensions received overseas
15/06/2015
This Practitioner report includes a step by step look at the relevant form you'll need to complete to claim double tax relief on UK pensions. This will then allow you to receive the pensions free of UK income tax, or at the reduced rate as laid down in the relevant double tax treaty. keep reading

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