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Where Taxpayers and Advisers Meet

Return-of-capital taxation in the UK?

thomasxerox
Posts:4
Joined:Thu Jan 21, 2021 4:40 pm
Return-of-capital taxation in the UK?

Postby thomasxerox » Thu Jan 21, 2021 4:58 pm

Hi everybody,

I'm a bit confused as to whether I should be paying tax on an investment I have in the EU, so I thought I'd ask on this forum, on the off-chance someone might know the answer.

So, I currently live in the UK and have an investment contract in Germany. My (EU-based) financial adviser has told me that this investment falls under the "return of capital" category and so, as a result, it is not taxable in the UK - or anywhere else (except in Germany, where I already pay taxes on this, which are deducted at source).

According to my financial adviser, there is nothing else to do, declare or pay anywhere else. However, my wife is freaking out as she seems pretty certain I should also be paying tax on this investment in the UK. Having very little financial knowledge and being completely unfamiliar with the UK tax system, I am unsure what to do.

Any help or advice would be greatly appreciated.

All the best,
Thom

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Return-of-capital taxation in the UK?

Postby maths » Fri Jan 22, 2021 5:49 pm

What does this mean:
My (EU-based) financial adviser has told me that this investment falls under the "return of capital" category and so, as a result,

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Return-of-capital taxation in the UK?

Postby bd6759 » Sun Jan 24, 2021 1:26 pm

Are you taking out more than you put in?

thomasxerox
Posts:4
Joined:Thu Jan 21, 2021 4:40 pm

Re: Return-of-capital taxation in the UK?

Postby thomasxerox » Mon Jan 25, 2021 5:07 pm

Are you taking out more than you put in?
Well, it's difficult to say as I originally invested a lump sum and, as a capital holder, I'm receiving monthly transfers based on that original investment. I home that makes sense? Thank you for taking the time to reply.

thomasxerox
Posts:4
Joined:Thu Jan 21, 2021 4:40 pm

Re: Return-of-capital taxation in the UK?

Postby thomasxerox » Mon Jan 25, 2021 5:08 pm

What does this mean:
My (EU-based) financial adviser has told me that this investment falls under the "return of capital" category and so, as a result,
Return of capital (ROC) refers to principal payments back to "capital owners" (shareholders, partners, unitholders) that exceed the growth (net income/taxable income) of a business or investment. Basically, it is a return of some or all of the initial investment, which reduces the basis on that investment. I myself am not completely clear on how all this works - hence my question, I guess. Thank you for taking the time to reply.


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