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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

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
Permanent home for UK-Australia tax treaty - USERNAME: pkjjhb - 27/05/2014
Tax Question: Regarding article 4 section 3 of the UK/ AUSTRALIA DOUBLE TAXATION CONVENTION 2003[DTC]I am interested in the UK interpretation of the following: For an individual with dual residency 4.3 says "that individual shall be deemed to be a resident only of the Contracting State in which a permanent home is available to that individual" If a house is owned in Australia, but let while the owner is away, it is clearly a "permanent home" but is it still considered to be "available" even though notice would need to be given to the tenants? Is a house rented in the UK on a 6 month let a "permanent home"? Generally, is a let house a "permanent home"? If one owns a house [assume vacant and available] in Australia and also rents in the UK on a 6 month let, but does not own any UK property, is it considered that "a permanent home is available in both States"? . . . keep reading
Impact of tax treaty for UK income - USERNAME: Seaman - 09/05/2014
Tax Question: Hello, I'm trying to get my situation clear regarding the DTA between the UK and Poland. My UK accountant says I should pay tax on UK derived income form the UK, which I have been doing in the normal way, at the normal rates on; interest income, dividends, rental income, self employed income and royalties. In Poland I have only been paying tax on some worldwide interest income, having no Poland derived income. But the DTA says UK tax interest should not exceed 5%, n dividends 10%, ental income should all be taxed in the UK,self employed income all in the UK [I think]and royalties at max 5%. So please how should this work in practice? What should be taxed where and when and at what rate? Regards . . . keep reading
Income tax for non-resident working in the UK - USERNAME:Taxexplorer - 08/05/2014
Tax Question: UK Company has appointed a Non-Executive Director (A). A is a US citizen, so not UK domiciled ordinary resident nor resident. A will perform his services in the UK which will cover 30 days a year and will be paid for this service. Am I correct in saying that A will be taxable on his UK income as he is performing his services IN the UK? UK company will have to apply PAYE and NIC to A's salary in the UK? Are there any exemptions for PAYE and or NIC? . . . keep reading
Where is your pension taxed?
31/03/2014
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
10/03/2014
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
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