Double taxation Agreement

Hello, I live and work in the Netherlands. My only income is there and I'm taxed there. I pay social security in the Netherlands too. However, I come to the UK to see my children most weekends. I have homes in both countries but spend most of my time in the Netherlands. I am in the UK for over 100 days a year though and am British by birth. Looking at the DTA, it looks like my centre of interests and potentially habitual abode will be looked at. I'm unclear how these are determined though. Could you offer any advice on how centre of interests and habitual abode are evaluated within the UK-NL DTA? Many thanks

Hi,

You can see guidance here:

RDR3 Statutory Residence Test

Thank you.

I am led to believe the DTA overrides the SRT. Is that incorrect?

Hi,

Yes, it does.

Thank you.
 

Hi does your reply mean that the DTA does overrides the SRT? Or are you affirming that his understanding on this statement is incorrect? It is a little confusing for me and sorry for asking for clarification. Regards Daniel

Hi Weai chang,
Yes, the DTA would take precedence to ensure you are not paying tax in both countries.
Thank you. 

 

Thanks for confirming. In my case, article 14 of the UK-NL DTA states that salary will only be taxed in the contracting states: Income From Employment 1. Subject to the provisions of Articles 15, 17 and 18 of this Convention, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State. 2. Notwithstanding the provisions of paragraph 1 of this Article, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if: a) b) c) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned; and the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and the remuneration is not borne by a permanent establishment which the employer has in the other State. Am I correct in thinking that a UK resident based on Article 4 of the same DTS would only pay tax on wages in the Netherlands on wages received for work conducted solely in the Netherlands, for a Dutch employer who does not have an office in the UK, and where the individual is present in the Netherlands for >183 days in a twelve month fiscal year?

Correction: Same DTA not DTS.

Hi,

If you are present in the Netherlands for more than 183 days, the UK would not consider you to be UK resident for the same period and as such the income would not be liable in the UK.

Thank you.

Thanks for coming back again. Just to be 100% clear. If this is my only income and I am in the Netherlands for >183 days, I do not need to file a self-assessment tax return? Many thanks.

Hi
That is correct.

Following on from this question, I have the identical employment situation in Bulgaria where I live and work, with family in the UK that I visit less than 183 days a year. However, I still have a property that I let out in the UK (which I am selling, but that is beside the point) that brings some income. I have bulgarian tax residency (with the appropriate tax residence certificate). I understand that income from that BTL property is taxable in the UK, the question is what is the correct reporting method? You already confirmed that such employment income is not reportable to HMRC via self assessment. Should I be reporting my BTL earnings on a self assessment or the Non-resident Landlord Scheme (NRLS)? If paying via the Non-resident Landlord Scheme, would I then claim my tax free allowance via R43? As a further complication, what is the situation when a property has had a flood and instead of receiving rental income, insurance payments are paid? It that still considered rental income?

Hi Anthony Chambers,
Where you are not UK resident and have income from UK property, you meet the criteria for completing a self assessment tax return each year.
In the tax return, you declare your UK income.
That might be things like UK dividens, bank / building society interest as well as the rental income and expenses.
The NRLS scheme, where approved, allows you to have your rental income paid gross.
Where not approved, basic rate tax should be deducted from the monthly rent and sent to HMRC.
Usually an agent or the tennant would do this.
In either case, a Self Assessment tax return is required.
As you don't say how many years you may have been renting out the property, you may find looking more information at the let property campaign help guide at:
Let Property Campaign
Thank you. 

Hi, I moved to Switzerland to start work in a new role. I’m a Swiss resident and have been present in Switzerland > 183 days of the 2023/2024 tax year. My situation is slightly different from Weia Chang because my company has an entity in the UK. But the role that I’m in requires me to be in Zurich. If I’m deemed dual resident in the UK and Switzerland during the UK tax year of 2023/2024. Would I meet the habitual abode test of the DTA because I’ve been present and working in Switzerland > 183? Background Info: I have a permanent home in both countries. My husband still resides in London while he looks for a new role in Switzerland. My only income is from my Swiss employment. I pay into Swiss taxes, Swiss pension, and I have a community in Switzerland, gym membership, and pay into private Swiss health insurance. Furthermore, I believe I’m a resident of the UK for 2023/2024. Because I moved August 30th, registered in Switzerland on August 31st, but did not start full time work until September 1st. I am legally obligated to register before starting work. So I needed to arrive in August. I entered the UK 57 days after leaving. I thought the days allowed for Split Year Case 1 was based on when I’d entered the country, August = 60 days. September = 52 days. Thank you in advance for your guidance.

Correction I was in Switzerland for 154 days, but in Switzerland residence established within 30 days if working. https://www.oecd.org/tax/automatic-exchange/crs-implementation-and-assistance/tax-residency/Switzerland-Residency.pdf

Hi,

You would need to look at the RDR3 statutory residence guidance and take the statutory residence test, to work out your tax residence status in the UK for 23/24.  

RDR3 Statutory Residence Test

If you are tax resident in the UK for the whole tax year, you would need to look a the guidance for split year treatment. If it applies, you would claim split year treatment by completting a tax return (SA100) and declaring on SA109.  You would only include that income which arose while you were in the UK.  

If split year treatment does not apply, you would declare your world-wide income in the tax year and claima foreign tax credit for up to 100% of the foreign tax paid.  

If you are not tax resident for the whole tax year, you only declare this on SA109 and declare your UK capital gains and income on the tax return, ignoring all of your overseas income and capital gains. For split year treatment case 1, the UK part of the tax year is the period from the start of the tax year until the start of the overseas part.

RDRM12080 - Residence: The SRT: Split year treatment: Case1: The UK and overseas parts of the tax year

Thank you.

If I live in the UK but I am Director of a Dutch company (very part time), where do I pay income tax and social security on the payment I receive from the company for carrying out these Director duties? My thinking is that I would need to pay income tax initially in the Netherlands and declare the payment also on my Self Assessment in the UK, but would receive relief on any amount already paid, to avoid double taxation. Is this correct? For social security contributions, since I am not resident in the Netherlands I am not entitled to any social security benefits there, so it doesn't make any sense to pay social security in the Netherlands. Therefore, would the social security be due only in the UK?

Hi Rollo Rose Sveinsson

We have responded to your question in the previous post.

Thank you

Hi Alastair,

As UK resident you are liable on your worldwide income in the UK.

Tax on foreign income

Thank you.

Is it that the original poster is a tax resident of the Netherlands or a UK resident who doesn't have to self-assess due to the DTA between the UK and Netherlands? It seems that because their sole income is derived through work in the Netherlands, that they are there for more than 183 days, and work for a Dutch employer that is based solely in the Netherlands that they are not required to self-assess in the UK under the terms of the DTA. I ask as their residency would have a bearing on things like access to healthcare and potentially where they would need pay social security (if working from the UK for more than 25% of their time).