US capital gains - UK non-dom resident

[Michael886]

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]

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

[maths]

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]

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]

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]

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]

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]

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]

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]

My intention is subsequently to return to Sweden, which I regard as my permanent home.

Is the correct answer!