Foreign dividends with withholding tax Croatia/UK

[michaels1989]

Hi all

I know I should probably consult a UK based accountant and I will for sure when I next visit the UK but I thought it's worth getting an insight from here first just so I know where I stand with my taxes.

I currently spend most of the year in Croatia and only have a house here. I currently have a LTD company in Croatia too. I am a dual Croatian and British citizen and tax registered in both countries.

I will need to report my foreign earnings on my self assessment unless I completely leave the UK which at this time I won't as I will likely visit friends and family up to around 1-3 months every year.

I currently take out dividends monthly from my LTD company in Croatia which are charged at a 10% 'withholding' tax + 1% city tax.

Does the withholding tax of 10% essentially mean that tax on the dividends has already been paid and I can include it on my self assessment as tax paid on dividends on the foreign income section?

If the above is correct that would mean that I have already paid the higher of the two as UK dividends are charged at 7.5% and no extra tax will be due in the UK unless I go over the threshold. Am I correct with this theory?

The only thing that confuses me is that in Croatia they call it withholding tax on dividends which is slightly different to personal tax on dividends in the UK. I think with withholding tax the company pays the tax and personal tax the individual pays the tax.

Many thanks in advance for any help

[robbob]

will need to report my foreign earnings on my self assessment unless I completely leave the UK which at this time I won't as I will likely visit friends and family up to around 1-3 months every year.
I currently take out dividends monthly from my LTD company in Croatia which are charged at a 10% 'withholding' tax + 1% city tax.
Does the withholding tax of 10% essentially mean that tax on the dividends has already been paid and I can include it on my self assessment as tax paid on dividends on the foreign income section?
If the above is correct that would mean that I have already paid the higher of the two as UK dividends are charged at 7.5% and no extra tax will be due in the UK unless I go over the threshold. Am I correct with this theory?
The only thing that confuses me is that in Croatia they call it withholding tax on dividends which is slightly different to personal tax on dividends in the UK. I think with withholding tax the company pays the tax and personal tax the individual pays the tax.

Hello michaels

Overseas taxation is not my thing but it works like this normally.
Presuming its a recongised witholding tax under the double taxation agreements - you should be fine claiming a uk tax credit up to the value of uk tax charged on that line item of income.

Its important you do the uk calc without that income source in - add in the income source - see what the increase in uk tax is and that is the maximum amount of overseas credit "from that line item onlly" that you can use.
Uk tax calcs can be quirky at times and don't always come out as you may expect!

So presuming the 10% credit is allowable (i have no idea if it is but i would say its highly likely you will be fine if i had to guess!) - most of the time if you are not higher rate taxpayer i would expect it would work out exactly as you say - however be sure to limit the credit you claim - as the hmrc computers will allow you to claim for more than you are enititled.

Note in the uk the first 2k of dividend income is taxed at 0% - so ensure you don't overclaim by claiming 7.5% of total dividends if you are eligible - restrict claim to method mentioned above - hmrc personal tax acount will allow you to run draft computations before submission so they will do the hard work as long as you enter the info in the correct manner.

[michaels1989]

Hi robbob

Many thanks for your reply.

That’s excellent news, thank you!