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Where Taxpayers and Advisers Meet

Dual tax resident - selling a UK property... CGT!

Wossy
Posts: 1
Joined: Thu Sep 12, 2019 6:43 pm

Dual tax resident - selling a UK property... CGT!

Postby Wossy » Thu Sep 12, 2019 6:55 pm

Hello,
I am looking for someone familiar with Spanish & UK tax and residency.

I have a wife and two children. We have a home in London, and I work in the UK (and around the world) through my UK Ltd company.

My wife and children have been living in Spain where we have been renting an apartment for the past ten months, while I travel for work.
So it appears that I am 'dual tax resident' for Spain and UK, although by doing the tie-breaker questions, it seems as though the UK would win (and I agree - Ltd company in UK, UK income only, UK property, and Nationality).

We would like to sell our home in London and buy a property in Spain.
If we sell our home in London we currently incur no UK CGT due to Main Residence Relief.... but would we incur CGT (23%) in Spain?
All the dual taxation articles online and on the HMRC website talk about 'income' and not CGT.
Can I invoke the tiebreaker rules and prevent Spain from taxing the CGT?

Thanks!

AGoodman
Posts: 884
Joined: Fri May 16, 2014 3:47 pm

Re: Dual tax resident - selling a UK property... CGT!

Postby AGoodman » Mon Sep 23, 2019 10:24 am

Probably not - Art 13(6) of the UK/Spain double tax treaty (you can google it)

"6. Gains from the alienation of any property other than that referred to in paragraphs 1, 2, 3, 4 and 5 shall be taxable only in the Contracting State of which the alienator is a [treaty] resident."

(square brackets inserted by me)

However, you may need to claim this treaty protection so should also take Spanish advice.

bd6759
Posts: 3109
Joined: Sat Feb 01, 2014 3:26 pm

Re: Dual tax resident - selling a UK property... CGT!

Postby bd6759 » Tue Sep 24, 2019 9:24 am

Article 13(6) does not apply.

This is immovable property referred to at 13(1), so will be taxed in UK even if you are resident in Spain.

AGoodman
Posts: 884
Joined: Fri May 16, 2014 3:47 pm

Re: Dual tax resident - selling a UK property... CGT!

Postby AGoodman » Tue Sep 24, 2019 9:41 am

Respectfully disagree but I was talking about Spain. The assumption is that UK tax applies but PPR means no UK tax is payable here.

I was looking at whether Spanish tax applies.

On the basis he is treaty resident in the UK (as per the tie-breakers) and the property is in the UK, Art 13(1) does not apply. That applies where the land is in the other state, not the country of treaty residence. Therefore Art 13(6) would apply to prevent Spain taxing the gain.

bd6759
Posts: 3109
Joined: Sat Feb 01, 2014 3:26 pm

Re: Dual tax resident - selling a UK property... CGT!

Postby bd6759 » Tue Sep 24, 2019 11:26 pm

I should have read all of the question

maths
Posts: 7594
Joined: Wed Aug 06, 2008 3:25 pm

Re: Dual tax resident - selling a UK property... CGT!

Postby maths » Wed Sep 25, 2019 12:05 pm

On the basis that the tie breaker test resolves any dual residence in favour of the UK then any. capital gain arising on the sale of UK immovable property would be subject only to UK CGT (if any). Spain would have no right to levy its CGT pursuant to the provisions of the UK/Spain DTA. [Article 13]

It would be advisable to ensure that there are no domestic tax provisions under Spain's tax laws which might allow an override of the DTA provisions (although I suspect this would be unlikely on your facts).

Are you sure under the tie-breaker test you would be treated as only UK, not Spanish, resident?

In short, I agree with AG.


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