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Where Taxpayers and Advisers Meet

Gift subject to immediate IHT?

pjbp
Posts:24
Joined:Wed Aug 06, 2008 3:50 pm
Gift subject to immediate IHT?

Postby pjbp » Sun Jan 20, 2019 6:00 pm

Since 2000 i have been living in UK and i emigrated on July 2015. So in total 16 years. I am dutch national. I left before the new non dom rules came in place (15 years out of 20) so am i correct that i am still a non dom and not deemed domiciled?

I will gift belgian property to my 12 year old daughter who lives in UK since 2009. She is still non dom. I wll give her the assets via a dutch legal entity ‘Stichting’. She will get certificates with which the property will be purchased. So the legal entity becomes the legal owner and the minor the economic owner.

My question will there be any UK tax implication now and in the future? Excluded property status?? Capital Gain Tax when property will be sold by converting the certificate or liquidation of the legal entity?

Please advise

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

Re: Gift subject to immediate IHT?

Postby maths » Tue Feb 12, 2019 3:57 pm

At the date you gift the Belgium located property you are not for UK tax purposes domicile or deemed domiciled. Hence, no inheritance tax or other UK tax charges arise.

If daughter remains non-deemed domiciled but UK resident for UK tax purposes any future gift or disposal of the foreign property by her should not precipitate any UK tax. However, re income tax and capital gains taxes a claim for remittance basis treatment would need to be made and a charge paid for the privilege.

It may be better for the Belgium property to be settled on a non-UK trust by you (at least from the UK tax perspective).

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: Gift subject to immediate IHT?

Postby AGoodman » Tue Feb 12, 2019 6:31 pm

The UK tax treatment of a stichting is impossible to assess without some in depth research as the UK tax code does not have any set treatment for foundations (other than the default treatment of Liechtenstein foundations as trusts under a bilateral agreement - even that is not fixed).

It can turn on the precise wording of the constitution and your daughter's rights. There has been a ruling in the past that a Dutch stichting is "transparent" which suggests they are unlikely to be treated as a company and so may be a trust or merely a nominee.

It should be excluded property while your daughter is not deemed domiciled but thereafter depends on whether the stichting would be treated as a full trust or just a nominee arrangement. If the former, the property could be excluded, if the latter it will not.

If she has an effective right to income then the likelihood is that she would be liable for income tax unless she elects for the remittance basis.
CGT treatment will again turn on this distinction. If a trust, it should be sheltered, if a nominee then it would be on the remittance basis (subject to election).

The charge for electing for the remittance basis is substantial.


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