Income taxation can be a problem for international workers and individuals who may reside in more than one country. In countries that are taxed around the world, a non-resident citizen who works abroad may have to pay his income, both in his country of origin and in the country where he is earned. The ICAEW Library subscribes to an IBFD international tax research platform that provides access to a collection of approximately 10,000 double taxation treaties currently in force. These are available upon request to ICAEW members and ACA students, as well as a number of materials that can help you interpret and apply them. Contracts are provided by e-mail. The UK has one of the largest tax treaty networks with over 100 countries. These treaties aim to eliminate double taxation of income or profits generated in one territory and paid to residents of another territory. They work by distributing between the same income and the same profits the tax rights that each country claims under its national laws. Most agreements are based on the Organisation for Economic Co-operation and Development (OECD) model agreement. The guidelines do not explain the conditions for granting discharge. For more information, see the text of the double taxation convention.
The double taxation treaty can be complicated. People with dual domicile must ensure that the appropriate amount of tax is paid, recovered or charged in each country. In some cases, more than two countries are involved. For example, a foreigner may live as an expatriate in the UK and receive income from a third country and should be familiar with DBA law to ensure that only the correct amount of tax has been paid in the relevant country. For the purposes of this Article, we consider a person to be resident for tax purposes in the United Kingdom and another country, although there are double taxation treaties between two countries. All countries have different rules when it comes to double taxation treaties, so it is important to follow the precise guidelines between the countries concerned. There is a recent list of countries (revised in October 2018) that have a double taxation agreement with the UK. United Kingdom Tax Treaties Alastair Munro, 2013 This work focuses on the practical interpretation of UK double taxation treaties and national double taxation exemption rules. The introduction provides the historical context of double taxation, a useful overview of the fundamental principles and examples of double taxation of income and capital gains tax. If two countries are trying to tax the same income, there are a number of mechanisms to grant tax breaks so that you don`t pay two taxes. The first mechanism to be examined is whether the double taxation treaty between the United Kingdom and the other country limits the right of one of the two countries to tax this income.
Every double taxation treaty is different, although many very similar guidelines follow, even if the details are different. Currently, non-UK taxpayers who claim the tax base but were established in the UK for at least seven of the last nine tax years must pay GBP 30,000 per tax year to benefit from the transfer base. The amount of the transfer is GBP 60,000 for non-domiciled naturalised persons who have been in the UK for at least 12 of the last 14 tax years. This means that migrants to and from Britain may have to consider two or three tax laws: UK tax laws; the tax laws of the other country; and any double taxation agreement between the United Kingdom and the other country. Find out more about Double Taxation Relief and a list of double taxation territories with the UK. In some cases, it is possible for the person to apply for tax breaks, but the amount of relief you receive depends on the UK`s DBA agreement with the country of origin of your income. The situation becomes more complicated when tax rates vary from country to country….