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Difference between unilateral relief and DTT?

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Hello everyone

I know before I even ask this its not going to go down well…. as its very complicated and circumstances specific but…

For UK individuals earning foreign income, why does it matter if we have a double taxation treaty with the foreign country, bearing in mind unilateral relief will be available anyway?

Is the point of a DTT, at least on occasion, to limit that relief?

Are there any times when the DTT means taxation in the foreign country can be avoided altogether?

Thanks for your help

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By rae10000
12th Sep 2019 10:23

Thinking about this further….

I guess the DTT will specify the ‘tie-breaker’ rules for duel residents, which is obviously a big benefit.

However, for an individual who is just UK resident?

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By Wilson Philips
12th Sep 2019 11:11

The Treaty will determine in which State(s) a particular source of income or gains will, or may, be taxed.

Unilateral relief is not "available anyway".

Unilateral relief is available where the specific source of income etc is not provided for in the Treaty. If credit is available, even if not claimed, under the Treaty then no unilateral relief (at least not by credit).

Also, unilateral credit relief (and Treaty credit relief) is available only if the foreign tax has been deducted/paid in accordance with the laws etc of that State. If it hasn't, relief by deduction instead should be available.

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