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Double Taxation Agreements

If you are considered a tax resident in two or more countries, it is important to understand possible tax relief through double tax treaties

Written on 7 May 2024

Double tax agreements, also known as Double Tax Treaties, are created between two countries which define the tax rules when it comes to the taxation of income or gains earned in either jurisdiction. 

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 individuals a double tax treaty will usually be relevant if you are either (i) resident in one of the two countries covered by the  treaty and have income in the other country, or (ii) resident in both countries and claiming that you are treaty non-resident in one of them.

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 defines 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. 

Typically, you will be treaty resident in the country in which you have your permanent home, but if you have a home in both countries it may be necessary to determine which country would be considered to be your ‘centre of vital interests’ i.e. which of the two countries it can be argued you have stronger family, social and economic ties to.  If your centre of vital interests is indeterminable further tests are considered which look at your habitual abode and nationality.

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

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

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 tax authorities (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.

The individual would still need to consider their local tax position outside of the UK, declaring their income in full and claiming a tax credit for the UK taxes paid as appropriate to avoid double taxation.

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 most double tax treaties in place, the individual would only be liable for tax in the UK With reference to the relevant treaty paragraph.

For example, a non-resident will usually pay no UK tax on UK source interest, UK dividend income or UK capital gains. However, bear in mind that the UK does retain a right to tax UK rental income and UK capital gains which relate to the sale of UK real estate, whether the direct sale of a property or the sale of shares which derive their value from real estate.

If treaty non-resident this also 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.

The best approach is to seek the services of a UK and international tax specialist 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 14th May 2024). There is an up to date list on the UK Government's website on active and historical double tax treaties.

Country with double tax treaty Date last updated
Albania 14 June 2021
Algeria 14 August 2017
Anguilla 08 November 2017
Antigua and Barbuda 06 January 2014
Argentina 21 February 2014
Armenia 27 February 2014
Aruba 08 November 2017
Australia 31 May 2021
Austria 30 June 2021
Azerbaijan 27 February 1990
Bahamas 05 October 2021
Bahrain 27 October 1990
Bangladesh 27 February 1961
Barbados 26 August 1998
Belarus 10 August 2018
Belgium 10 January 2020
Belize 23 July 2018
Bermuda 02 July 2018
Bolivia 29 March 2005
Bosnia-Herzegovina 14 December 2020
Botswana 03 February 2014
Brazil 29 November 2022
British Virgin Islands 21 April 1999
Brunei 23 March 1995
Bulgaria 13 January 2017
Cameroon 14 April 2008
Canada 15 November 2019
Cayman Islands 05 May 2023
Chile 14 July 2022
China 27 July 2018
Colombia 18 December 2019
Croatia 04 April 2008
Cyprus 01 July 2022
Czech Republic 01 June 2023
Denmark 08 December 2020
Dominica 06 October 2021
Egypt 19 October 2007
Estonia 18 January 2017
Ethiopia 08 March 2013
Falkland Islands 05 February 2007
Faroes 03 March 2010
Fiji 19 October 2008
Finland 20 May 2019
France 20 May 2019
Gambia 11 August 2008
Georgia 15 November 2019
Germany 08 September 2022
Ghana 06 October 2006
Gibraltar 08 April 2020
Greece 15 August 2008
Grenada 28 July 2016
Guernsey 19 August 2022
Guyana 14 February 2007
Hong Kong 23 December 2010
Hungary 05 March 2012
Iceland 29 September 2021
India 12 October 2022
Indonesia 17 August 2007
Iran 19 December 2013
Ireland 13 August 2019
Isle of Man 15 April 2024
Israel 01 November 2019
Italy 06 August 2006
Ivory Coast 16 December 2012
Jamaica 17 December 2013
Japan 13 November 2018
Jersey 12 June 2019
Jordan 05 July 2005
Kazakhstan 06 January 2014
Kenya 27 December 2013
Kiribati 27 December 2013
Kosovo 08 January 2016
Kuwait 01 June 2005
Kyrgyzstan 28 April 2023
Latvia 22 February 2007
Lebanon 27 December 2013
Lesotho tax treaties 17 July 2019
Liberia 08 November 2017
Libya 26 April 2010
Liechtenstein 16 January 2013
Lithuania 03 January 2019
Luxembourg 08 December 2023
Macao 06 October 2021
Macedonia 13 August 2007
Malawi 30 December 2013
Malaysia 13 January 2011
Malta 11 April 2019
Marshall Islands 08 November 2017
Mauritius 15 November 2021
Mexico 07 June 2011
Moldova 06 January 2009
Monaco 08 November 2017
Mongolia 27 March 2009
Montenegro 01 March 1989
Montserrat 27 December 2013
Morocco 20 August 2007
Myanmar (Burma) 14 June 2019
Namibia 30 December 2013
Netherlands 06 January 2020
Netherlands Antilles (Curacao,Sint Maarten and BES Islands) 08 November 2017
New Zealand 30 November 2023
Nigeria 05 February 2007
Norway 31 January 2024
Oman 14 October 2021
Pakistan 15 August 2006
Panama 17 December 2013
Papua New Guinea 22 February 2007
Philippines 15 November 2013
Poland 06 December 2018
Portugal 26 March 2024
Qatar 09 August 2011
Romania 30 December 2013
Russia 18 August 2023
Saint Christopher (Saint Kitts) and Nevis 27 October 2022
Saint Vincent and the Grenadines 06 October 2021
San Marino 06 December 2023
Saudi Arabia 19 February 2021
Senegal 02 August 2016
Serbia 12 October 2018
Sierra Leone 30 December 2013
Singapore 20 May 2019
Slovak Republic 01 June 2023
Slovenia 11 October 2018
Solomon Islands 30 December 2013
South Africa 01 June 2015
South Korea 28 September 2021
Spain 16 April 2018
Sri Lanka 30 December 2013
St Lucia 08 November 2017
Sudan 04 February 2013
Swaziland 02 January 2014
Sweden 07 April 2022
Switzerland 29 September 2021
Taiwan 07 April 2022
Tajikistan 14 January 2016
Thailand 02 January 2014
Trinidad and Tobago 02 January 2014
Tunisia 02 January 2014
Turkey 18 August 2006
Turkmenistan 24 January 2017
Turks and Caicos Islands 08 November 2017
Tuvalu 02 January 2014
Uganda 02 March 2007
Ukraine 17 May 2022
United Arab Emirates 21 October 2019
Uruguay 21 August 2017
United States of America 09 August 2021
Uzbekistan 27 July 2018
Venezuela 21 February 2007
Vietnam 22 February 2007
Zaire 02 January 2014
Zambia 02 January 2014
Zimbabwe 02 January 2014

Get help understanding tax treaties to get your tax obligations correct

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 UK and international tax specialist. 

Therefore we offer a free introductions to tax specialists who will offer an initial free consultation who will be able to answer your general questions and help you understand how a tax treaty could apply to you and help ensure you get your tax obligations right - and avoid unnecessarily being taxed twice.

Once you have completed the initial consultation, you will also have the opportunity to get formal advice and tax help using specialist tax services. If you wish to do so, our partner will create a proposal which will detail all services, fees and timescales - after which you can decide whether you wish to go ahead or not. There are no obligations to proceed with any paid services at any time.

Use the link below to request your free introduction to a tax specialist and once your details are received, we will evaluate your situation and hand-pick the best partner from our network to contact you directly.

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