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Where Taxpayers and Advisers Meet

Reclaiming foreign tax

cardplayer4
Posts:3
Joined:Thu Oct 30, 2008 12:47 pm
Reclaiming foreign tax

Postby cardplayer4 » Wed Jan 19, 2022 9:02 am

I am wanting to reclaim tax paid in Germany. through my tax return.

The total deducted in Germany was more than I owe HMRC on my tax return.

The amount they say I owe is just for NI contributions. There is no mention of any tax overpayment.
Does this mean that I cannot claim back ALL the German tax I paid because my tax bill is not large enough?

This seems wrong as I am being taxed twice on the same amount - once in Germany and then again here,

I expected there to be an overpayment for the difference carried forward.

Can anyone help?

Thank you

robbob
Posts:3210
Joined:Wed Aug 06, 2008 4:01 pm

Re: Reclaiming foreign tax

Postby robbob » Wed Jan 19, 2022 10:28 am

https://www.gov.uk/tax-foreign-income/taxed-twice#:~:text=You%20can%20usually%20claim%20Foreign,income%20in%20your%20tax%20return.&text=You%20usually%20still%20get%20relief,Tax%20or%20Capital%20Gains%20Tax.
What you’ll get back
You may not get back the full amount of foreign tax you paid. You get back less if either:

a smaller amount is set by the country’s double-taxation agreement
the income would have been taxed at a lower rate in the UK
HMRC has guidance on how Foreign Tax Credit Relief is calculated, including the special rules for interest and dividends in ‘Foreign notes’.

You cannot claim this relief if the UK’s double-taxation agreement requires you to claim tax back from the country your income was from.
The total deducted in Germany was more than I owe HMRC on my tax return.
Does this mean that I cannot claim back ALL the German tax I paid because my tax bill is not large enough?
If you have done your own return you don't want to presume anything check the full details and make sure your claim is correct , often with sa its up to you to "manually adjust" the credit you can claim downover so there is always potential for things to be worse than what has been procesed if you have "had a stab at doing it yourself" in addition to what has been processed possibly also being worse than what you expected. For example relief on ovreseas dividend income tax is normally limited to the exact tax owed on that line item - so you cant set the tax against other dividend income tax never mind claim the excess back.

I would say trying to do foreign tax credits or foreign anything yourself is akin to trying to fix the brakes on your car then testing you car on steep downhill incline - not ovber sensible. If you do go down that route make sure you have fully folllowed all the detailed instructions and ask all teh relevant questions before you point your car downhill to start your journey (equivalent of click submit button on tax return)
This seems wrong as I am being taxed twice on the same amount - once in Germany and then again here,
Its not clear from your earlier post that you are being taxed "twice" - i read is as being that some of the tax paid couldnt be claimed back , have you actually been taxed twice ? that would seem wrong. Note top up tax should be expected under some circusmtances i would not call that being taxed twice albeit you might.

Note be careful if you have german pension income - from memory i think some pension incoem from germany may be exempt from uk taxation entirely - thast quite a rare situation but does evidence the minefield that is overseas tax and do it yourself.

If you have paid someone else to do your tax directly quizz them and feel free to post back explanations here - bods on here lover nothing more than too find errors in other bods calculations. I would not expect it to be wrong if you have paid someone but also i would not be surprised if that was the case!

bd6759
Posts:3745
Joined:Sat Feb 01, 2014 3:26 pm

Re: Reclaiming foreign tax

Postby bd6759 » Thu Jan 20, 2022 12:39 am

One point to note is that the UK is not responsible for repaying tax deducted and paid in Germany (or on any other country).


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