If you come to the UK and have UK earned income that is taxed in your home country, you usually have to pay uk taxes. Your home country should give you double tax relief by giving you a credit for UK taxes paid. However, if you are a resident of a country with which the UK has a double taxation agreement, you may be entitled to a UK tax exemption if you spend less than 183 days in the UK and have a non-UK employer. Under UK rules, he is not resident, so he is taxable in the UK only on his income from the UK. Mark remains resident in Germany and is therefore taxable there with his worldwide income. The double taxation treaty tells Mark that the UK has the main right to tax income and that if Germany also wants to tax it, the foreign tax credit method should be used to avoid double taxation. Under the applicable double taxation treaties, if a natural person is considered not to be a resident of the United Kingdom, the natural person would only be taxable in the United Kingdom if the income comes from activities in the United Kingdom. This is important because it means that all non-UK capital gains and profits are protected from UK tax. The agreement was also the first Hong Kong DTA to be signed using the Organisation for Economic Co-operation and Development standard on the exchange of tax information. Therefore, we offer a free initial consultation with a qualified accountant who can give you answers to your questions and help you understand if a double taxation treaty might apply to you and help you save significant amounts of unnecessary taxes.
It is much more common to use the services of a qualified accountant experienced in using tax breaks using double taxation treaties. Fees vary depending on the complexity of a person`s personal situation, in almost all cases, tax savings far exceed the cost of using an accountant – and they can be sure that they are paying the right amount of tax with absolute confidence. You will probably need to seek professional advice if you are in a double taxation situation. To find a consultant, visit our help page. In addition, a double taxation agreement between Hong Kong and Saudi Arabia is currently pending. There is also a memorandum of understanding with China that states that in another scenario, a double taxation treaty may provide that income that is not exempt from tax must be calculated at a reduced rate. You can find out more in HMRC`s HS304 help sheet “Non-residents – Relief under double taxation agreements” on GOV.UK. Finally, you should know that some countries, such as Brazil, do not have a double taxation agreement with the United Kingdom. If this is the case, you may still be able to claim a unilateral tax reduction compared to the foreign tax you paid. The legislation allows Hong Kong to conclude comprehensive DTAs containing the Organisation for Economic Co-operation and Development (OECD) international standard for the exchange of information. Until June 2001, there were no comprehensive double taxation treaties in Hong Kong. Since then, however, the number of contracts has grown quite rapidly.
The agreement also plays a role in protecting the Treasury by containing provisions to combat tax evasion and evasion – in part through measures that provide for the exchange of information between tax authorities. All of the UK`s recent double taxation treaties largely follow the approach of the Organisation for Economic Co-operation and Development (OECD) Model Convention on the Taxation of Income and Capital. The agreements provided for in the Ordinance continue this approach. For the purposes of this Article, we consider a natural person to be a tax resident of the United Kingdom and an additional country, although double taxation treaties may exist between two countries. In November 2010, the Hong Kong/Luxembourg COMMISSION was updated to include the article on the exchange of information in order to bring the agreement into line with the international standard of the Organisation for Economic Co-operation and Development. When two countries are trying to tax the same income, there are a number of mechanisms in place to offer tax breaks so you don`t end up paying taxes twice. The first mechanism to be examined is whether the double taxation agreement between the United Kingdom and the other country restricts the right of one of the two countries to tax this income. There is a list of current double taxation treaties on GOV.UK. Certain types of visitors to the UK receive special treatment under a double taxation treaty, e.B students, teachers or foreign government officials. The updated deal lowered the withholding tax on Hong Kong residents receiving dividends from UK real estate investment trusts from 20% to 15%.
In addition, the withholding tax for Hong Kong residents who receive royalties and interest from the UK is limited to 3% instead of the non-contractual rate of 20%. The Hong Kong/UK CDTA replaces existing limited double taxation treaties to avoid airlines and for shipping revenues. Comprehensive double taxation treaties have been concluded between Hong Kong and the following countries (with the date “in force”): Since many rules and complications can arise in the application of double taxation treaties, it is important to seek the professional support of a qualified and experienced accountant. The agreement enters into force in Hong Kong from 1 April 2011 and expires in the UK: for example, a person who is a resident of the UK but has rental income from a property in another country is likely to have to pay taxes on rental income in the UK and that other country. This is a common situation for migrants who have come to work in the UK. However, you should remember that in practice, the transfer base helps to avoid double taxation if you are a resident of the UK and earn foreign income and profits abroad. If you are a resident of two countries at the same time or if you are a resident of a country that taxes your global income, and you have income and profits from another country (and that country taxes that income on the basis that it is drawn in that country), you may be taxable on the same income in both countries. This is called “double taxation.” This document contains the following information: Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Hong Kong Special Administrative Region of the People`s Republic of China on the Prevention of Double Taxation and the Prevention of Tax Evasion in the Field of Taxes on Income and Capital Gains, with Protocol: London, 21 June 2010. . .