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Where Taxpayers and Advisers Meet

Non-dom CGT - Remittance basis

Michael886
Posts:19
Joined:Mon Apr 24, 2017 4:05 pm
Non-dom CGT - Remittance basis

Postby Michael886 » Mon Jan 06, 2020 3:14 pm

HI all,

I am a Swedish and British citizen domiciled in Sweden, with residence in the UK. I am looking to invest in Sweden on remittance basis, and will be doing so through a Swedish 'shell account' similar to an ISA. My understanding from the below is that I am exempt from UK CGT so long as the assets remain outside the UK. If they are brought into the UK, the CGT relief is limited to what I have paid in tax in Sweden.

Is this correct?

Section 6.63 in the below "HMRC remittance basis guidance notes" states that "Investment income from a non UK source" only is liable to tax if it is remitted to the UK, "subject to the terms of any relevant Double Taxation Agreement".
https://www.gov.uk/government/publications/residence-domicile-and-remittance-basis-rules-uk-tax-liability/guidance-note-for-residence-domicile-and-the-remittance-basis-rdr1#cona

The below "UK/Sweden Double Taxation Agreement" states that:
"..income or capital gains are relieved from tax in a Contracting State and, under the laws in force in the other Contracting State, an individual, in respect of that income or that capital gain is subject to tax by reference to the amount thereof which is remitted to or received in that other Contracting State and not by reference to the full amount thereof, then the relief to be allowed under the Convention in the first-mentioned Contracting State shall apply only to so much of the income or capital gain as is taxed in that other Contracting State."

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/507416/UK-Sweden-DTC_-_in_force.pdf

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Non-dom CGT - Remittance basis

Postby maths » Mon Jan 06, 2020 6:45 pm

As a UK resident remittance basis user UK CGT applies with respect to any gain made on foreign situs assets only if any part of the sale proceeds are remitted to the UK.

Where no remittance occurs and hence no UK CGT charge arises, then to the extent the DTA provided for exemption from Swedish tax on the gain such exemption is removed and Swedish tax may be leviable ie the exemption from Swedish tax only applies to the part of the gain which is remitted.

Michael886
Posts:19
Joined:Mon Apr 24, 2017 4:05 pm

Re: Non-dom CGT - Remittance basis

Postby Michael886 » Tue Jan 07, 2020 11:14 am

Many thanks, maths.

To confirm, so long as the gains remain outside the UK, they are not subject to UK tax? Ie. if it remains in Sweden it will only be taxed there, even if the tax rate is lower than the UK CGT?

Michael886
Posts:19
Joined:Mon Apr 24, 2017 4:05 pm

Re: Non-dom CGT - Remittance basis

Postby Michael886 » Tue Jan 07, 2020 12:12 pm

I should add that the ISA equivalent in Sweden don't tax gains, but rather apply a fixed annual tax for the entire account, irrespective of gains or losses. Hence it is not capital gains tax.

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Non-dom CGT - Remittance basis

Postby maths » Thu Jan 09, 2020 2:39 pm

To confirm, so long as the gains remain outside the UK, they are not subject to UK tax? Ie. if it remains in Sweden it will only be taxed there, even if the tax rate is lower than the UK CGT?
Correct.

Technically, if a UK CGT charge arises (eg a remittance occurs) then any Swedish tax available for tax credit must be of a similar nature to the UK CGT charge which wouldn't appear to be the case.

Michael886
Posts:19
Joined:Mon Apr 24, 2017 4:05 pm

Re: Non-dom CGT - Remittance basis

Postby Michael886 » Thu Jan 09, 2020 3:39 pm

Many thanks for the help, Maths.


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