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Where Taxpayers and Advisers Meet

Relief Foreign Tax (FTCR) amount levels DTA IT-UK

Joined:Tue Oct 20, 2015 9:18 pm
Relief Foreign Tax (FTCR) amount levels DTA IT-UK

Postby paultje_007 » Sat Aug 21, 2021 1:22 pm

Hi everyone,
can anybody tell me what the brackets are for Relief for Foreign Tax between Italy and UK for a Dual resident: IT+UK,also called Foreign Tax Credit Relief (FTCR) for general income tax.

The GOV.Uk site section about this has nice examples, but the don't apply to me. Nowhere are there (online) calculators where one can just enter the income from Country A, to seek Credit relief for Country B with a few tickboxes like resident or not....
And the DTA Digest of Double Taxation Treaties doesn't have any figures either.

Basically I need to know as both a resident in Italy and UK, but non-British (cross border commuter), getting paid in Euro's in Italy, and thus paying tax in Italy, how much can I earn before having to pay a part of tax in the UK aswell? So what is the level of foreign income in Italy a person can have before having to pay tax again (or partially) in the UK?
There is a DTA (Double Taxation Agreement) between Ita & Uk but these don't mention brackets or levels or amounts or percentages of how much....

For example:
An EU national, Italian resident earns 50.000 euros p/y. He commutes to the UK to live with a partner for more then 91 days a year, thus is classified as a UK resident too.
Therefore he needs to inform HMRC of his foreign income, and do a tax return every year. There is a DTA between the 2 countries. So he shouldn't have to pay double tax over this income. (let's say no other assets, capital gains etc, just basic salary income)
But what can he expect from this tax return?
Will it be £0,- so balanced, no pay or return to the tax office, or will it be an XX amount to pay back to the UK HMRC?

Thank you

Joined:Sat Feb 01, 2014 3:26 pm

Re: Relief Foreign Tax (FTCR) amount levels DTA IT-UK

Postby bd6759 » Sat Aug 21, 2021 7:44 pm

FTCR doesn’t work that way.

If you have income of £1000 that is taxable in both countries, the UK will deduct from your UK tax the amount of foreign tax paid on that £1000 (limited to the amount of UK tax paid on it).

However, the DTA will give taxing rights to one or the other, meaning that the income will only be taxable in one country, so no FTCR is needed.

Return to “Income Tax”