This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

US capital gains - UK non-dom resident

Michael886
Posts:19
Joined:Mon Apr 24, 2017 4:05 pm
US capital gains - UK non-dom resident

Postby Michael886 » Wed Sep 13, 2023 7:33 pm

Hello,

I am a Swedish national who will be moving to the United Kingdom as a non-domiciled resident. I will declare my saving and investments held outside the UK on remittence basis, and as such, not pay tax on whatever I do not bring into the country. Most of my savings and investments are held in a brokerage account in the United States.

My question is; what is the IRS' view on gains made in the US by foreign individuals who do not pay tax in their country of residence (because of non-dom status)? Would I have to pay tax on my capital gains in the US if I do not in the UK?

Additional info:
-- I have UK citizenship but not UK domicile.
-- My domicile will remain in Sweden.
-- My tax residency will be in the UK.
-- I will have no ties to Sweden (limited tax liability) once I relocate.
-- I have no US citizenship, greencard or other form of US residency.

bd6759
Posts:4234
Joined:Sat Feb 01, 2014 3:26 pm

Re: US capital gains - UK non-dom resident

Postby bd6759 » Thu Sep 14, 2023 7:55 am

If you have no ties to a Sweden, what makes you think you are domiciled there?

maths
Posts:8506
Joined:Wed Aug 06, 2008 3:25 pm

Re: US capital gains - UK non-dom resident

Postby maths » Thu Sep 14, 2023 5:14 pm

As a UK resident but non-UK domiciled individual subject to UK remittance basis treatment no relief from US tax on US source income/gains will be available under the UK/USA DTA if none of such income/gains are remitted to the UK tax and taxed accordingly.

If such income/gains are remitted to the UK then in principle relief from US tax will be available under the DTA.

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

Re: US capital gains - UK non-dom resident

Postby Michael886 » Thu Sep 14, 2023 8:06 pm

If you have no ties to a Sweden, what makes you think you are domiciled there?
I was born in Sweden and hold Swedish citizenship. UK citizenship was acquired through naturalisation after brexit.

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

Re: US capital gains - UK non-dom resident

Postby Michael886 » Thu Sep 14, 2023 8:29 pm

As a UK resident but non-UK domiciled individual subject to UK remittance basis treatment no relief from US tax on US source income/gains will be available under the UK/USA DTA if none of such income/gains are remitted to the UK tax and taxed accordingly.

If such income/gains are remitted to the UK then in principle relief from US tax will be available under the DTA.
Thank you, maths.

You are correct, but the US does not tax non-resident aliens on capital gains as far as I am aware. This should apply to me as a UK resident. If I claim remittence based treatment and do not bring my US based gains into the UK, do I not pay tax in either country? (at least until I bring it into the UK)

bd6759
Posts:4234
Joined:Sat Feb 01, 2014 3:26 pm

Re: US capital gains - UK non-dom resident

Postby bd6759 » Sat Sep 16, 2023 8:00 am

If you have no ties to a Sweden, what makes you think you are domiciled there?
I was born in Sweden and hold Swedish citizenship. UK citizenship was acquired through naturalisation after brexit.
That doesn’t make you domiciled. If you have given up all ties to Sweden, you will have acquired a domicile elsewhere.


The DTA gives the country of residence sole taxing rights. Whether it’s domestic law would tax the gain is irrelevant.

DavidTreitel
Posts:270
Joined:Thu Aug 16, 2012 4:31 pm

Re: US capital gains - UK non-dom resident

Postby DavidTreitel » Sat Sep 16, 2023 6:00 pm

The US tax answers are:
1. As a remittance basis user you will not be able to benefit from the 15% treaty rate on US source dividends. These will be taxed at 30%.
2. US domestic law exempts gains from US tax.

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

Re: US capital gains - UK non-dom resident

Postby Michael886 » Mon Sep 18, 2023 1:42 pm

If you have no ties to a Sweden, what makes you think you are domiciled there?
I was born in Sweden and hold Swedish citizenship. UK citizenship was acquired through naturalisation after brexit.
That doesn’t make you domiciled. If you have given up all ties to Sweden, you will have acquired a domicile elsewhere.


The DTA gives the country of residence sole taxing rights. Whether it’s domestic law would tax the gain is irrelevant.
Understood. My intention is subsequently to return to Sweden, which I regard as my permanent home.

My rental contract in Sweden does not allow second hand letting for longer than 3 months, so I am not giving up my Swedish accommodation tie by choice.

I was not born in the UK; I don't have the UK as my domicile of origin; and I have spent less than 15 of the past 20 tax years in the country. I will be renting throughout my stay.

My understanding was that the above meant I am not domiciled in the UK, but I evidently need to investigate this further with a tax specialist.

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

Re: US capital gains - UK non-dom resident

Postby Michael886 » Mon Sep 18, 2023 1:44 pm

The US tax answers are:
1. As a remittance basis user you will not be able to benefit from the 15% treaty rate on US source dividends. These will be taxed at 30%.
2. US domestic law exempts gains from US tax.
Thank you, David.

bd6759
Posts:4234
Joined:Sat Feb 01, 2014 3:26 pm

Re: US capital gains - UK non-dom resident

Postby bd6759 » Mon Sep 18, 2023 10:46 pm

My intention is subsequently to return to Sweden, which I regard as my permanent home.
Is the correct answer! :D


Return to “Capital Gains Tax, CGT”