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Posted Tue, 06 Aug 2024 12:04:10 GMT by atom
Dear HMRC Admins, I've asked this question in the personal tax forum and they replied that they are not able to assist on matters of business tax (which is half of my question) so I thought it would be beneficial to ask here, too. Tradeco GmbH makes a profit in Germany with no permanent establishment in, and no ties to, the UK. It distributes these profits, after all relevant German taxes, to its shareholders. One of these shareholders is Holdco Ltd, incorporated in the UK, which owns 80% of stock and voting rights in Tradeco GmbH. Holdco Ltd is wholly owned by a UK resident non-domiciled natural person who claims the remittance basis. The personal tax forum Admins wrote that: (1) "All sources of UK income and capital gains, remain taxable in the UK". The trading income of DE Tradeco GmbH is clearly not UK income. If a dividend is distributed to UK Holdco Ltd and then in turn distributed to the non-dom shareholder of Holdco on a foreign bank account, is that considered UK income because it is paid by a UK company? Even if the holding company is merely a "pass-through" entity and therefore transparent? (2) "The remittance basis applies only to foreign sources of income / capital gains not remitted to the UK". I think in this case there would be no remission if the dividend is paid to a foreign bank account, correct? The issue then remains of whether the dividend from the holding company to the natural person was UK income for the natural person in the first place, even if it was "produced" abroad and the holding company is "pass-through"/"transparent". My question is whether the mere presence of a non-trading UK-incorporated and UK-resident holding "stains" the foreign dividend and turns it into UK income when it is distributed to the resident non-domiciled or whether the UK holding company is transparent for this purpose and therefore the dividends remains foreign-earned income for the person and is therefore not subject to tax in the UK as long as it's not remitted to the UK. Thank you for your support.
Posted Thu, 08 Aug 2024 10:48:35 GMT by HMRC Admin 25 Response
Hi 
Because of the evident complexities, this is a complex query for which we do not have adequate knowledge of all the relevant facts.
Even so, we consider these questions tax planning or tax advice for the Company which, unfortunately, HMRC as a Department does not provide.
We can only therefore suggest you seek professional advice.
Thank you. 

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