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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.

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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

Can you use a UK agency company to trade in the UK tax free?
12/11/2014
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
Can you use the capital gains tax article in a double tax treaty to avoid UK CGT?
03/11/2014
Can you use the capital gains tax article in a double tax treaty to avoid UK CGT? This is something we're asked about regularly, so we've put what you need to know in this article. Avoiding CGT is a popular tax planning objective and this makes any opportunity to avoid it very appealing. This article looks at a couple of CGT articles from tax treaties and examines how these impact on the UK and overseas tax treatment. . . . keep reading
UK corporation tax on german property income? - USERNAME: sterling - 21/10/2014
Tax Question: We have a uk registered ltd company client.The only director and shareholder is german,he lives in germany ,the company owns a german property ,the only income for the company is rent received from a german tennant.our client assures us that the company trading results are declared and taxed in germany,(if it is profitable).We currently propose to file the accounts at companies house.Should we make any returns to HMR&C ? . . . keep reading
Using a UK double tax treaty to work in the UK free of UK income tax
20/10/2014
Using a UK double tax treaty to work in the UK free of UK income tax The general rule is that if you have a UK employment the earnings from that employment are subject to UK income tax. This applies irrespective of your residence status. However, this is not the full story, as the terms of a UK double tax treaty will impact on this. In many cases these treaties can be used to exempt any UK salary from UK income tax. In this article we take a detailed look at the use of double tax treaties to avoid UK income tax on UK employment income . . . keep reading
How Facebook and other companies are using double tax treaties to reduce tax
08/10/2014
How Facebook and other companies are using double tax treaties to reduce tax

Double tax treaties offer some tremendous opportunities for tax planning. In particular establishing treaty residence overseas can effectively completely eliminate UK corporation tax. In this article we look at establishing treaty residence overseas and how Facebook has created tax planning opportunities from its transfer of operations to Ireland . . . keep reading

UK tax and treaty provisions - USERNAME: Seaman - 29/09/2014
Tax Question: Hello,I am English, UK non-resident living in Poland but have UK generated income through rent, interest and dividends. I understand that I have to pay tax on this UK generated income in the UK and via my UK accountant have been paying this through self assessment. My accountant completes the assessment without taking into account the DTA with Poland ie exactly the same as if I were UK resident on all UK generated income. My accountant says anything relating to the DTA should be handled in Poland. 1. Is it correct that all UK derived income should be declared in the UK? 2. Should my UK return be completed with no reference to the DTA? 3. If so how should I then be dealing with my tax affairs in Poland if I have no Polish derived income? 4. Are there any benefits I can derive from a DTA? Thanks . . . keep reading
Treaty Residence - When you can claim the remittance basis and still benefit from UK personal allowances
24/09/2014
Treaty Residence - When you can claim the remittance basis and still benefit from UK personal allowances Non doms who claim the remittance basis of tax will usually lose the benefit of the UK personal allowance unless they have overseas unremitted income of less than £2,000. HMRC have however confirmed that there is one additional case where an individual could be entitled to claim the remittance basis but still qualify for the UK personal allowance. This arises when you are UK resident but also treaty resident overseas. This article looks in detail at this exemption . . . keep reading
Follow up on Interest Deduction Question - USERNAME: ZM - 03/09/2014
Tax Question: I refer to my question dated 30/06/2014: I now have checked that the country I am resident in have Double Tax Treaty agreement in force with UK. How do I go about applying exception to this requirement to deduct basic rate tax. Looking forward to hearing from you. . . . keep reading
Does double tax treaty still be prevent gains of offshore company being attributed to UK resident? - USERNAME: Casio - 08/08/2014
Tax Question: Hi Can you please confirm if a company that is resident in Malta [which has DTR with UK] with UK resident shareholders - then the attribution rule can be disapplied. Which other countries [other than Mauritius] also have the attribution rules disapplied. . . . keep reading
PAYE for French employees working in the UK and impact of double tax treaty - USERNAME: charliebrown - 08/08/2014
Tax Question: French company has contract to install lift equipment for a UK company in the UK. The French company will send over it's own employees who will be present in the UK for approx two months. Are there any PAYE requirements? It looks like the double tax treaty exemption [Article 15 [2]] with regards to income tax would apply. The French company has no presence for PAYE in the UK, but would it be necessary for the employees to claim the DTR exemption and then request authorisation to not apply PAYE via the direct payment scheme. It would seem easier in practise to not do anything [as employees will remain on the French payroll], however is this acceptable? . . . keep reading
Using a UK company in offshore tax planning
20/06/2014
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
Will you be subject to UK national insurance contributions when working abroad?
18/06/2014
Will you be subject to UK national insurance contributions when working abroad? If you've been posted abroad as well as assessing whether you'll be subject to UK income tax, you'll need to consider whether you'll subject to UK national insurance on your salary. This will primarily depend on the status of the country where you'll be working. This article looks at the different options available. . . . keep reading
Tax planning with the UK-China double tax treaty
30/05/2014
Tax planning with the UK-China double tax treaty The new UK-China double tax treaty came into force on 1 January 2014. In this article we look at some of the treaty provisions and how they can be used to reduce UK tax . . . keep reading
Taxing rights for employment income and double tax relief - USERNAME: charliebrown - 29/05/2014
Tax Question: French tax resident individual is seconded to work in the UK for 18 months. Salary is paid by French employer but subject to PAYE in the UK [direct payment scheme] as all duties performed in the UK. The French employer also deducts French retention tax, but this is not taken into account in the PAYE calculations. At the end of the UK tax year, the individual completes a UK tax return for their UK employment income. From what I understand double tax relief for UK income tax is claimed in France, with the individual entitled to a repayment of at least some of French retention tax, depending on the French tax rate. A claim for double tax relief for the French tax should not be made in the UK on the basis that all employment duties were performed in the UK and therefore the UK has first taxing rights? Is this correct? . . . keep reading
Taxing rights for employment income and double tax relief - USERNAME: charliebrown - 29/05/2014
Tax Question: French tax resident individual is seconded to work in the UK for 18 months. Salary is paid by French employer but subject to PAYE in the UK [direct payment scheme] as all duties performed in the UK. The French employer also deducts French retention tax, but this is not taken into account in the PAYE calculations. At the end of the UK tax year, the individual completes a UK tax return for their UK employment income. From what I understand double tax relief for UK income tax is claimed in France, with the individual entitled to a repayment of at least some of French retention tax, depending on the French tax rate. A claim for double tax relief for the French tax should not be made in the UK on the basis that all employment duties were performed in the UK and therefore the UK has first taxing rights? Is this correct? . . . keep reading
Assistance on interpreting article 14 of the UK-Australia double tax treaty - USERNAME: Bullseye5 - 28/05/2014
Tax Question: I am a dual resident of Australia and the UK. I am considering working 6 months in Australia for an Australian resident organisation, then 6 months in the UK for a UK resident organisation. Re article 14 of the UK/ AUSTRALIA DOUBLE TAXATION CONVENTION, sections 2, 3 and 4 do not apply to me. So I am left with section 1 which I do not understand! Does this mean that I am only taxed in Australia on money I earn there; and only taxed in the UK on money earned there? I have put in the words Australia and UK to try and make it more readable eg "..remuneration derived by a resident of the UK in respect of an employment shall be taxable only in the UK unless the employment is exercised in Australia. If the employment is so exercised, such remuneration as is derived from that exercise may be taxed in Australia." and "..remuneration derived by a resident of Australia in respect of an employment shall be taxable only in Australia unless the employment is exercised in the UK. If the employment is so exercised, such remuneration as is derived from that exercise may be taxed in the UK" But that still doesn't help. Is there other legislation or HMRC advice making it clear what to do? . . . keep reading
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