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

Certificate of residence under the UK-Norway double tax treaty - USERNAME: erwin - 10/05/2016
Tax Question: I am resident in Norway and I plan to relocate to Britain within this year. I have not been resident of Britain before, and I have no other ties to Britain. Therefore I expect to be treated as a non-dom. Question 1: I would like to be treated as resident in Britain from the date of arrival. Norwegian authorities require me to present a certificate of residence where British authorities certify that I am resident in Britain according to the British-Norwegian tax agreement. Which documentation will the HMRC require in this case? Is it sufficient to rent or buy an accomodation? Must I expect to wait a certain time before such a certificate can be issued? Question 2: I would like to keep some of my savings offshore, and I might use the remittance basis. Would it in this respect be a disadvantage to remit my savings to Britain, and then transfer some of it to an offshore account? keep reading

Claim for double tax relief - USERNAME: taxexplorer - 27/04/2016
Tax Question: UK Company has to pay US corporate income tax under a voluntary disclosure cover last 6 years. Is it possible for the UK Company to claim double tax relief in the year the US corporate income tax is paid? Are there any restrictions? or do we need to open up prior years which most are now closed. thanks keep reading

Non doms, the personal allowance and double tax treaties - USERNAME: Kazv - 15/04/2016
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

Tie breaker rules in the UK-Ireland double tax treaty - USERNAME: opoczno - 14/04/2016
Tax Question: Hi, I was wondering if you knew what the 'tie breakers' are for the UK/Ireland Double tax treaty? keep reading

Profits from trading in UK property - more on the Budget anti avoidance rules targeting treaty planning Profits from trading in UK property - more on the Budget anti avoidance rules targeting treaty planning
The Budget statement includes the announcement of measures to ensure that all profits arising from trading, developing or dealing in UK land and property will be within scope of UK tax, irrespective of the absence of a UK Permanent Establishment. In this article we look at the effect of the changes in detail keep reading

Double tax relief for foreign late payment penalties? - USERNAME: UPLANDS - 15/02/2016
Tax Question: The following questions relate to foreign tax in relation to a foreign rental property of a UK resident & domiciled individual taxpayer. 1. Should the foreign witholding tax be included in the UK return based a] on when it was PAID or b] in relation to the fiscal period it relates to [note the fiscal year in the foreign country is Jan-Dec not Apr-Mar so how does one deal with this ?] 2. Can late payment interest on foreign tax be included in the UK return ? 3. Can late payment penalties on foreign tax be included in the UK return ? 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

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
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

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

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
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
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

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