Tax residency when living abroad (in EU)

[flyaway]

Hello,

I have lived elsewhere in the EU for the last few years. Before that I always lived in the UK. During the time I have lived elsewhere in the EU, I did not work in the UK or have any regular income from the UK. I have never worked in or received any regular income from any other EU country.

Now I have started drawing on a private pension which is taxed at source in the UK. I assumed that I would have to pay tax on this to the government of the EU country where I know live, and claim the tax back from the UK.

However, when I went to the local tax office in the country where I now live, and showed them my official identification card that gives me permission to live in that EU country, they surprisingly said the following:

“You are not tax resident here, and because you do not work here, you can choose where you pay the tax on your income that you say is not earned from working”

I was visibly surprised, but 2 ‘tax officers’ insisted that this was correct. If this is correct, it is very convenient for me because I do not have to do anything and still all my tax affairs are in order.

Although I vaguely remember reading a post a few years ago that said you can still be tax resident in the UK even if you have not lived there for a long time, it still sounds strange.

Can anyone help clarify the situation here?

Many thanks in advance.

[hendersontax]

Cannot comment on the position in the EU country but feel free to get in touch to discuss how the UK side. You cannot be UK tax resident if you don't spend any time here. If you're spending some time here then you'd need to look at the Statutory Residence Test. You'd expect the UK pension to be taxable in the UK as UK-sourced income but you would need to consider whether a double tax treaty would override that - though if you are non-resident in both the UK and the country in which you live (this would be very unusual) then the treaty will not be of any assistance.

[flyaway]

You cannot be UK tax resident if you don't spend any time here

Thanks very much for your reply. Sounds like a misunderstanding as I suspected, and I need to go back to the local tax office in the EU country and start again.

So if I am not resident in the UK, then surely I must be resident in the EU country. The double taxation treaty says: .....[private] pensions and other similar remuneration paid in consideration of past employment to
a resident of a Contracting State and any annuity paid to such a resident shall be taxable only in that State. To me, this is clear that the tax has to be paid in the EU country.

Paying the tax to the EU country will be easy, of course! Re-claiming it back from the UK, not so easy. Maybe there is some way to stop it being taxed at source, but I have not found this way so far.

[maths]

The position is clear.

It is possible to not be resident anywhere. In such a case no double tax agreement is relevant.

If not resident anywhere the taxability of any income will (generally speaking) be determined by the country's domestic tax regime in which such income arises eg someone not resident anywhere is still liable to UK income tax on UK source income.

A taxpayer resident nowhere cannot simply choose where to be taxed.