Double Tax Treaties

Double tax treaties (also known as double tax agreements) are created between two countries which define the tax rules when it comes to a tax resident of both countries.

Double tax treaties can be complex and often will require professional assistance, but they are created to try to ensure that an individual is able to claim tax relief rather than have to pay tax on the same income in two different jurisdictions.

Each double tax treaty is different, although many follow very similar guidelines – even if the details differ.

For the purpose of this article, we are considering an individual as being tax resident in the UK and an additional country, although double tax treaties can exist between any two countries.

Application of double tax treaties and “treaty residence”

Where an individual is tax resident in the UK and also tax resident in another jurisdiction, i.e. a “dual resident”, and the other jurisdiction has a tax treaty with the UK, the treaty divides the taxing rights over an individual’s income and gains between the two countries.

Essential to determining whether it is possible and then how to apply a double tax treaty is establishing the individual’s “treaty residence” position, as it is the country of treaty residence which generally assumes the taxing rights. 

Where you are treaty resident will be determined by applying a series of “tie breaker” tests as outlined in the relevant Double Tax Agreement in place with the UK.

Two typical examples where treaty non-residence are important are as follows:

UK employer, dual resident but treaty resident outside the UK

In this example, an individual works for a UK employer but is a dual resident and spends their time working in the UK and overseas. Given that the individual is working in two or more tax jurisdictions (including the UK) it is very important to determine where they are treaty resident.

In this scenario, the individual may be considered “treaty non-resident” from a UK perspective and therefore the Employment Income Article of the Double Tax Agreement will usually restrict the UK tax liability to UK workdays only. This means that tax on income would only be due to the UK HMRC for the days that the individual actually worked in the UK, and not days worked in other jurisdictions.

This arrangement is typical in scenarios where an expat is employed on a local UK contract, but their family have remained at home somewhere in Europe and they spend three to four days in the UK and the remaining time at the family home outside of the UK.

High net worth investor, dual resident but treaty resident outside the UK

If an individual is considered a treaty non-resident in the UK, under any double tax treaties in place, the individual would only be liable for tax in the UK where the income has come from UK activities. This is important because it means that all non-UK investment income and gains are sheltered from UK tax.

How to claim “treaty residence” under double tax treaties

Despite being relatively common, the application of double tax treaties, and therefore the claim for tax relief can be a complicated affair.

To begin the process, an individual who believes they may be tax resident in two jurisdictions, including the UK, must make a claim for treaty residence via a self-assessment tax return and a through a specific tax treaty relief claim.

It is possible for people to do this themselves, however, there are many rules, requirements and tests which need to be applied correctly to ensure that the correct tax residence statuses can be applied.

Far more common is to request the services of an accountant who is qualified and experienced in claiming tax relief using double tax treaties. Fees will vary depending on the level of complexity of an individual’s personal circumstances, in nearly all cases the tax savings far exceed any costs incurred by using an accountant – and they can be sure that they are paying the right amount of tax with total confidence.

Countries with a double tax treaty with the UK

The following table lists the countries that have a double tax treaty with the UK (as of 23 October 2018). There is an up to date list on the UK Government’s website on active and historical double tax treaties.

Country with double tax treatyDate last updated
Albania01 December 2013
Algeria14 August 2017
Anguilla08 November 2017
Antigua and Barbuda06 January 2014
Argentina21 February 2014
Armenia27 February 2014
Aruba08 November 2017
Australia01 February 2012
Austria01 January 2007
Azerbaijan27 February 1990
Bahrain27 October 1990
Bangladesh27 February 1961
Barbados26 August 1998
Belarus10 August 2018
Belgium30 July 2018
Belize23 July 2018
Bermuda02 July 2018
Bolivia29 March 2005
Bosnia-Herzegovina25 August 1996
Botswana03 February 2014
Brazil21 March 2017
British Virgin Islands21 April 1999
Brunei23 March 1995
Bulgaria13 January 2017
Burma16 December 2013
Cameroon14 April 2008
Canada05 January 2017
Cayman Islands20 January 2011
Chile28 February 2018
China27 July 2018
Colombia04 November 2016
Croatia04 April 2008
Cyprus08 August 2018
Czech Republic29 October 2007
Denmark01 March 2011
Egypt19 October 2007
Estonia18 January 2017
Ethiopia08 March 2013
Falkland Islands05 February 2007
Faroes03 March 2010
Fiji19 October 2008
Finland16 December 2013
France07 January 2010
Gambia11 August 2008
Georgia24 January 2011
Germany16 March 2017
Ghana06 October 2006
Gibraltar08 November 2017
Greece15 August 2008
Grenada28 July 2016
Guernsey03 July 2018
Guyana14 February 2007
Hong Kong23 December 2010
Hungary05 March 2012
Iceland12 December 2012
India28 August 2018
Indonesia17 August 2007
Iran19 December 2013
Ireland25 January 2011
Isle of Man03 July 2018
Israel23 February 2011
Italy06 August 2006
Ivory Coast16 December 2012
Jamaica17 December 2013
Japan25 July 2018
Jersey03 July 2018
Jordan05 July 2005
Kazakhstan06 January 2014
Kenya27 December 2013
Kiribati27 December 2013
Kosovo08 January 2016
Kuwait01 June 2005
Kyrgyzstan22 June 2017
Latvia22 February 2007
Lebanon27 December 2013
Lesotho04 November 2016
Liberia08 November 2017
Libya26 April 2010
Liechtenstein16 January 2013
Lithuania01 July 2005
Luxembourg27 December 2013
Macedonia13 August 2007
Malawi30 December 2013
Malaysia13 January 2011
Malta11 August 2006
Marshall Islands08 November 2017
Mauritius20 July 2018
Mexico07 June 2011
Moldova06 January 2009
Monaco08 November 2017
Mongolia27 March 2009
Montenegro01 March 1989
Montserrat27 December 2013
Morocco20 August 2007
Namibia30 December 2013
Netherlands08 August 2018
Netherlands Antilles (Curacao,Sint Maarten and BES Islands)08 November 2017
New Zealand18 September 2008
Nigeria05 February 2007
Norway13 February 2014
Oman13 June 2016
Pakistan15 August 2006
Panama17 December 2013
Papua New Guinea22 February 2007
Philippines15 November 2013
Poland29 December 2006
Portugal08 April 2013
Qatar09 August 2011
Romania30 December 2013
Russia06 September 2006
Saint Kitts and Nevis30 December 2013
Saudi Arabia23 December 2009
Senegal02 August 2016
Serbia12 October 2018
Sierra Leone30 December 2013
Singapore15 August 2006
Slovak Republic02 February 2012
Slovenia11 October 2018
Solomon Islands30 December 2013
South Africa01 June 2015
South Korea06 October 2006
Spain16 April 2018
Sri Lanka30 December 2013
St Lucia08 November 2017
Sudan04 February 2013
Swaziland02 January 2014
Sweden17 December 2013
Switzerland18 January 2018
Taiwan01 July 2005
Tajikistan14 January 2016
Thailand02 January 2014
Trinidad and Tobago02 January 2014
Tunisia02 January 2014
Turkey18 August 2006
Turkmenistan24 January 2017
Turks and Caicos Islands08 November 2017
Tuvalu02 January 2014
Uganda02 March 2007
Ukraine24 October 2017
United Arab Emirates18 January 2017
Uruguay21 August 2017
USA01 July 2005
USSR28 March 1999
Uzbekistan27 July 2018
Venezuela21 February 2007
Vietnam22 February 2007
Zaire02 January 2014
Zambia02 January 2014
Zimbabwe02 January 2014

The impact of Brexit on double tax treaties

As every tax treaty is agreed between the two jurisdictions, rather than through the EU or EEC there is not expected to be any impact on any tax treaties that the UK currently has.

Get help understanding possible double tax treaties with a free consultation

As there are many rules and complications which can arise when attempting to apply double tax treaties, it is important to seek professional assistance from a qualified and experienced accountant.

Therefore we offer a free initial consultation with a qualified accountant who will be able to provide you with answers to your questions and help you understand whether a double tax treaty could apply to you and help you save significant amounts of unnecessary tax.

If you decide that you wish to proceed with any tax advice or services on offer, you will be provided with a quote after which you can decide whether you wish to go ahead or not.

To request your free consultation, simply enter your details using the form and we will arrange for an accountant to get in touch with you directly.

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