American born client

American born client

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I have an american client with an italian wife.  In late 2013/14 they left the UK to live and work in Italy but he retains his UK company through which he is still working.   We will be applying for an NT code for 2015/16, at which stage he will probably take a high salary to use up the company profit, but for the current year we will keep him on a much lower salary with a large dividend, due to the NI that is payable on the salary for the first 12 months of being away..  However, my one question is this:  whilst his Italian wife would be due personal allowances as an EU citizen, is he due any personal allowance for a year in which is is not resident in the UK?  He is USA domiciled.

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James Reeves
By James Reeves
02nd Dec 2014 07:16

No

As a US national he won't receive a UK PA while non-resident.

 

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By David Treitel
04th Dec 2014 21:33

Has he made a check the box election? If not why not, and why is he thinking of making a change in pay without looking at US and Italian tax rules?

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By WillowTree
11th Dec 2014 10:29

Hi David

I know he has an Italian accountant who will, I presume take the US background into account.

I am not sure I understand your question about check the box election?

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By User deleted
11th Dec 2014 10:44

As a US citizen ...

... he will have to file a US tax return and declare his UK income, which will be taxed there.

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By kirstiej
12th Dec 2014 14:12
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By ruthp
12th Dec 2014 14:14

US / UK

Hi

US / UK taxes is a complex area-specialists should be involved eg.

www.westletondrake.com

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By David Treitel
13th Dec 2014 11:56

From a US perspective this is a Controlled Foreign Corporation. If the client has not elected for the entity to be disregarded (commonly known as a “check the box elction”) the dividends are more likely to give rise to current US tax on payment of dividends.

If a check the box election has been made the client is taxed instead on the underlying income of the entity and can claim both the foreign earned income and housing exclusions plus foreign tax credits.

David Treitel | Managing Director | American Tax Returns Ltd

The Old Exchange, 12 Compton Road, London, SW19 7QD

Tel: 020 3542 6330

Email: [email protected]

Providing US tax expertise helping Americans and their advisers

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