CGT and DOUBLE TAXATION CONVENTION

[StefanT]

Hi there!
I have a question regarding the following article from UK/Bulgaria DOUBLE TAXATION CONVENTION
“…..
Capital gains
(1) Gains derived by a resident of a Contracting State from the alienation of immovable property and situated in the other Contracting state may be taxed in that other State.”

What is meaning of “may be” in this case please? Is it a question of a choice or it is ruled by other regulations?

Many thx,
Stefan

[section 44]

It would depend on whether the national law of that other state imposes a tax charge in such circumstances.

[maths]

"may" means "will" if (as per section 44's comment) the local law permits the levying of such tax.

In the UK, for example, CGT is not leviable on a non-UK resident and thus the UK "may" not levy CGT (unless the non-UK resident is trading in the UK).

[Preston]

I ran up against a similar problem with the same wording in the UK/Poland DTC.
If the Bulgarian DTC uses the same wording as the Polish, the answer to your query lies in the paragraphs that follow your quotation. These paragraphs define which particular capital gains are taxable in which country.

[StefanT]

I missed to mention that I am UK resident since 1996.

The Bulgarian law frees from CGT the sale of a property when the owner has kept it for at least three years.

From the above and from what I read meanwhile as a UK resident it seems that I have to pay the full CGT in the UK.

[maths]

Correct.

If you are not UK domiciled the remittance basis may be appropriate depending upon your circumstances.