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Dual Resident CGT – Gain subject to UK tax

Is UK tax due on a gain from the disposal of Turkish property made by a UK-Turkey dual tax resident?

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I have a client who is resident for tax purposes in both UK and Turkey.

He has made a disposal of a residential property in Turkey in which a gain has arisen.

TCGA 1992 s1A gives the UK taxing rights on worldwide disposals for UK tax residents:

“A person who is UK resident for a tax year is chargeable to capital gains tax on chargeable gains accruing to the person in the tax year on the disposal of assets wherever situated.”

 

Under the UK - Turkey double tax agreement, he would be deemed a Turkish resident for treaty purposes. This takes us to Article 13 which deals with capital gains. I’m exuding paragraphs 2 and 3 as they aren’t relevant to the situation.

ARTICLE 13

Capital gains

(1) Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 of this Agreement and situated in the other Contracting State may be taxed in that other State.

(4) Gains from the alienation of any property other than that referred to in paragraphs (1), (2) and (3) of this Article shall be taxable only in the Contracting State of which the alienator is a resident. However, such gains which arise in a Contracting State from the alienation of property within a period of one year from the date of its acquisition may be taxed in that State.

 

If he was UK resident under the treaty, then the answer is a straight yes, he is subject to UK tax. But the fact he is Turkish resident under the tie breakers has me doubting the position.

Given he is a Turkish resident for treaty purposes, neither of these paragraphs seem to cover the situation we have (a Turkish resident disposing of Turkish immovable property).

That being the case, does that simply mean that as my client is a UK tax resident under UK law, and as the double tax agreement does not provide any form of relief or exemption, he is therefore subject to UK tax on his gain?

Edit: for clarity, we have been advised that there is no tax due in Turkey on this gain - something to do with him having owned the property 5 years. Therefore there is no foreign tax avaialble to offset if there is UK tax due. 

Replies (58)

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Lone Wolf
By Lone_Wolf
29th Aug 2019 15:25

Paragraph 4 adds to my doubt as it gives taxing rights only to the country of treaty residence (ignoring the 1 year rule) for any other property. So a dual resident, who is Turkish resident under the treaty, would have no UK tax on gains arising from shares.

If my analysis is correct then the UK could tax gains on immovable property situated in Turkey, but not on the disposal of UK shares which seems bizarre.

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By SteLacca
29th Aug 2019 15:38

As a general rule, unless explicitely provided for, and to the best of my understanding, domestic legislation trumps the DTT. As such, I vote taxable.

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Replying to SteLacca:
Lone Wolf
By Lone_Wolf
29th Aug 2019 17:30

See I thought it was the opposite . Domestic legislation applies, unless the double tax agreement between the countries provides for a different scenario.

Take the Hong Kong treaty for example.

A UK resident is generally taxable on worldwide income, including foreign pensions. However the UK:HK treaty states that pensions arising in HK are taxable only in HK, and so the UK resident doesn't suffer UK tax on this.

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By The Dullard
29th Aug 2019 16:27

Where a DTT says something "may" be taxed in one place or another, it usually contemplates that it might end up being taxable in both contracting states, with relief being given by way of credit.

The UK legislation permits credit for the Turkish tax if the individual is UK resident. Since the tax would be payable in Turkey whether or not the individual is resident in Turkey, I can't see any reason why you can't get credit for the Turkish tax.

In Turkey they may get credit for the UK tax. Who knows?

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Caroline
By accountantccole
29th Aug 2019 17:13

If he's treaty resident in Turkey, don't you then read 13(1) as n/a as the property is in the country he is "resident"?

I'd be leaning to not taxable in the UK but phoning my helpline to double check!

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Replying to accountantccole:
Lone Wolf
By Lone_Wolf
29th Aug 2019 17:23

I'm not swaying that way.

I agree that 13(1) isn't applicable, as it's not the situation I have. The treaty doesn't seem to cover the situation I have.

My understanding is that he is only Turkish resident for the purposes of the treaty, and the areas that are specifically covered by the treaty. If the area is not specifically covered by the treaty, then he falls to be taxed under the domestic laws of the UK and Turkey.

I may well take your advice and phone our helpline tomorrow and ruin someones Friday.

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Replying to Lone_Wolf:
Caroline
By accountantccole
29th Aug 2019 17:27

We deal with a lot of these but every one has a subtle difference so I always check and double check!

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Caroline
By accountantccole
29th Aug 2019 17:26

Online tech resource says "Resolving dual residence situations .......…. one of the countries will be given taxing rights on total income and gains on the basis of residence and the other country will be limited to taxing only the income and gains which derive from a source within its jurisdiction."

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By Tax Dragon
29th Aug 2019 17:42

This doesn't seem to work as I'd expect.

But I can't see what I'm missing (erm, that might qualify as the most stupidly obvious thing I've said all day!)

13(4) says that the gain shall be taxable only in Turkey. I thought that this would be recognised in UK law under TIOPA, e.g. s6(3)(c). But the residence condition (see s6(7)) takes you to ITA and the definition there is surely one based on UK law – the SRT. So it looks to me to be taxable under UK law.

You apply UK law for Self Assessment. That means you have to go through the rigmarole of making a (non-SA) claim under the treaty.

I hope I'm wrong – do educate us tomorrow if the helpline says otherwise (assuming Tim hasn't corrected me in the meantime).

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Replying to Tax Dragon:
Lone Wolf
By Lone_Wolf
29th Aug 2019 18:34

Tax Dragon wrote:
13(4) says that the gain shall be taxable only in Turkey.

Does it though?

13(4) is for "any property other than that referred to in paragraphs (1), (2) and (3)"

Paragraph 1 refers to immovable property, so it can't be covered by 13(4).

Or does the fact Paragraph 1 refers to immovable property "situated in the other Contracting State " mean Paragraph 1 only covers immovable property situated in the state you're not treaty resident in?

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Replying to Lone_Wolf:
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By Tax Dragon
29th Aug 2019 19:12

Lone_Wolf wrote:

Or does the fact Paragraph 1 refers to immovable property "situated in the other Contracting State " mean Paragraph 1 only covers immovable property situated in the state you're not treaty resident in?

Is there another possible interpretation?

Btw, you won't be surprised to learn that I'd looked at 3(a) before I looked at 3(c). I don't agree with paras007's interpretation of it.

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Replying to Tax Dragon:
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By Tax Dragon
29th Aug 2019 19:19

That said, if it is correct, it would give the outcome that I would expect. So there may be a helpful definition somewhere that we just need to be pointed at.

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Replying to Tax Dragon:
Lone Wolf
By Lone_Wolf
29th Aug 2019 19:25

Tax Dragon wrote:

Lone_Wolf wrote:

Or does the fact Paragraph 1 refers to immovable property "situated in the other Contracting State " mean Paragraph 1 only covers immovable property situated in the state you're not treaty resident in?

Is there another possible interpretation?

Btw, you won't be surprised to learn that I'd looked at 3(a) before I looked at 3(c). I don't agree with paras007's interpretation of it.


My interpretation is that Paragraph 1 deals with immovable property in general, not just immovable property situated in the other contracting state.
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Replying to Lone_Wolf:
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By Tax Dragon
29th Aug 2019 19:55

I.e. it would say the same if you crossed out the reference to the other state?

Cross out instead the reference to article 6 (which I've not looked at but I assume that reference adds nothing of concern) and see what you think then.

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By paras007
29th Aug 2019 18:13

13(4) clearly states that gain taxable only in Turkey and not the UK. This is then reflected in the UK legislation under TIOPA s6 3(a).

You need to make the appropriate claim on the tax return.

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Replying to paras007:
Lone Wolf
By Lone_Wolf
29th Aug 2019 18:37

paras007 wrote:

13(4) clearly states that gain taxable only in Turkey and not the UK.


Does it though?

13(4) is for "any property other than that referred to in paragraphs (1), (2) and (3)"

Paragraph 1 refers to immovable property, so it can't be covered by 13(4).

Or does the fact Paragraph 1 refers to immovable property "situated in the other Contracting State " mean Paragraph 1 only covers immovable property situated in the state you're not treaty resident in?

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Replying to Lone_Wolf:
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By unearned luck
30th Aug 2019 02:48

1. Para 13(1) doesn't refer to immovable property. It refers to immovable property situated in the other contracting state. Words have to be read in context not in isolation.
2. DTTs wouldn't make sense if the taxpayer was simultaneously resident in both countries. They tend to have a tie-break clause to ensure that the person is only resident in one of countries for the purposes of the treaty. The UK/Turkey treaty has such a clause (Art 4).
3. If a DTT between states A&B said that something is only taxable in country A, in must mean that it is not taxable in country B and therefore must trump the 'domestic law' of country B as it has been expressed in this thread. If this weren't so such clauses in DTTs would have no effect.
4. But, where country B is the UK, at least, the supposed conflict between 'domestic law' and the treaty doesn't exist as the UK puts treaties on the statute book as secondary legislation. The Turkey agreement for example is SI 1988/932.
5. BTW, you might think that, from their name, the purpose of DTTs is to relieve taxpayers from the burden of being taxed twice on the same income or gain, but you would be wrong as the government says this:

"Double taxation treaties are drawn up to protect the government’s taxing rights and protect against attempts to avoid or evade tax. They contain provisions for the exchange of information between national taxation authorities."

here:

https://www.gov.uk/government/publications/double-taxation-treaties-over...

Not a sausage about saving taxpayers from excessive tax.

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Replying to unearned luck:
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By Tax Dragon
30th Aug 2019 09:08

1., 2. Agreed
3.,4. "Trumps" is the wrong word. I know it wasn't yours. As you say, the agreement is given effect in the UK by UK law. But that doesn't make it part of UK law.

So the secondary question, which you've not addressed, is how is effect given? Ultimately, it's clear that the gain won't be taxable in the UK, because the treaty says so. Absent the treaty, the gain would be taxable in the UK. My understanding (though I've no idea where I get this from) is that you self assess under UK law [and that the treaty is not part of UK law, as above]. You wouldn't need great chunks of TIOPA if you could go straight to the treaties.

Is there, for instance, a CGT version of... (wandering memory alert) is it s18 CTA 2009? Something that says UK residence follows treaty residence, anyway. I'm not aware of it (else I wouldnt ask the question! Honestly, I think I've caught some disease about stating the blindingly obvious in this thread!!)

5. Interesting, thanks.

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Replying to Tax Dragon:
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By unearned luck
05th Sep 2019 02:20

My attempt to address the secondary question is that a country's laws tend to have territorial limits (there are exceptions*). I don't think that stealing a camel in Timbukto is contrary to the Theft Act 1968, as the Queen's writ doesn't run to Mali.

Broadly speaking the UK's tax code seeks to tax residents on their worldwide income and gains (sometimes measured by remittance) and non-residents on their UK sourced income and gains. An Ankara taxi driver with no connection to the UK does not need to declare his income to HMRC despite there being no explicit exemptions other than those you have identified. The situation wouldn't change if there was no UK/Turkey tax treaty.

Having said that, s 1A TCGA1992 has something to say about territorial limits.

I add, for the sake of completeness, that the expression 'tax return' has two meanings (per the SC in Cotter and Derry) and if a non-resident does complete a UK return and omits income or gains from his return in the narrow sense because he claims treaty relief he should include the omitted items in the tax return in the wide sense by completing form HS304 and attaching it to the return in the paper or electronic sense. I hope that makes sense.

*eg HMRC's power to issue sch 36 information notices see Liz (oao Jimenez) v the FTT in the CoA.

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Replying to unearned luck:
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By Tax Dragon
05th Sep 2019 16:25

Your typical Turkish taxi driver (even if plying his trade profitably in Ankara) probably isn't UK resident, even without relying on his country's tax treaty with the UK to determine that fact.

I don't have time to research this in depth, but a quick look at Tax Reporter yields the quote (from ¶170-150) "double taxation agreements… are to have effect in accordance with TIOPA 2010, s6…"

This seems to confirm what I was saying – UK law gives effect to tax treaties, it is not "trumped" by them... or at least, if they are a 'higher authority', they are there to be appealed to, not self-applied.

This seems to give weight to my secondary question, which maybe I didn't ask very well (as you appear to have answered an entirely different question). What I was getting at is: how does the taxpayer avail himself of the benefit of the treaty provisions? Can he self assess? Sometimes, yes, if the UK taxes acts permit that (eg s18 CTA 2009). But in this CGT situation I couldn't immediately see what permitted such an approach. In which case does he have to self assess as if UK resident and make a separate claim under the treaty? Or am I missing something? Or misreading s6 (e.g. 3a)?

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Replying to Tax Dragon:
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By Tax Dragon
05th Sep 2019 11:00

Additional: as I was closing it, I noticed that ¶170-150 concludes with, "Double taxation agreements do not confer rights on UK taxpayers directly. Rights arise instead under TIOPA 2010 and the statutory instrument that brings the relevant agreement into effect." This says it much better than me.

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Replying to Tax Dragon:
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By unearned luck
09th Sep 2019 00:04

"Your typical Turkish taxi driver (even if plying his trade profitably in Ankara) probably isn't UK resident, even without relying on his country's tax treaty with the UK to determine that fact."

Exactly. That is why he wouldn't need to declare his income to HMRC.

"This seems to confirm what I was saying – UK law gives effect to tax treaties, it is not "trumped" by them... or at least, if they are a 'higher authority', they are there to be appealed to, not self-applied."

Again exactly. the effect of the treaty is to exempt a gain that wouldn't otherwise be exempt. It thus trumps the normal rule. A treaty's override is by virtue of s6: "s6(1)…..double taxation arrangements have effect .... despite anything in any enactment". Under SA it is to be self-applied. The basic tenet of the SA system is that the taxpayer does everything that in former days was done by the inspector in order to arrive at the quantum of tax due.

"[H]how does the taxpayer avail himself of the benefit of the treaty provisions?"

In law s6. In practice by including a claim as part of his TR (see my remarks about form HS304).

"Can he self assess? Sometimes, yes".

Always yes, if he is required to make a return or wishes to make a repayment claim (form R43). Probably not otherwise - he (the OP's client) would be in the same position as the taxi driver.

"But in this CGT situation I couldn't immediately see what permitted such an approach. In which case does he have to self assess as if UK resident and make a separate claim under the treaty? Or am I missing something? Or misreading s6 (e.g. 3a)?"

I've already described the claim process. I don't understand how you could misread s6 as it seems unambiguous to me; ss3(a) provides that articles in treaties that give relief from CGT are given affect. Treaties provide two methods of giving relief viz: exemption (taxable only in one of the contracting states where the other state is the UK) and credit relief.

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Replying to unearned luck:
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By Tax Dragon
09th Sep 2019 11:01

It's HS302 rather than HS304. But yes I would put the gains in box 3(c) and leave them off the tax return.

My difficulty with your reading of s6 is that you appear to interpret "relief" like a layperson. Reducing UK tax by reference to overseas tax paid provides a "relief". Excluding a gain from UK charge is not a tax "relief", according to the way I believe that term to be used in UK tax law.

I have to concede that HS302 doesn't make much sense unless s6 operates the way you say (which, as I have already said in this thread, is the way I expected it to operate). It's just that I haven't got my head round where it says what I think it should say. [I suspect it's 6(3)(c), not (a), and that there's a definition of "non-resident" that I'm overlooking. But I may be wrong.]

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Replying to Tax Dragon:
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By unearned luck
10th Sep 2019 00:48

I don't think that 'relief' has a meaning as used in UK tax law; it has a plethora of meanings, including:
Hold-over relief = the right to pass your capital gain on to someone else
Overpayment relief = the right to correct an error that led to too much tax being paid after it is too late to amend a return.
ER = a 10% rate of tax
RAR = a deduction
PPR= the right to expand the size of the taxpayer's BRB.
EIS relief = the right to reduce the taxpayer's assessment by up to 30% of the cost of an investment.
EIS deferral relief and roll-over relief = the right to defer a capital gain to a future tax year.
Examples where 'relief' means something akin to exemption include:
The former retirement relief
PPR relief
BPR
APR.
Perhaps in some of these examples 'relief' is vernacular rather than statutory, if so I don't think it destroys my thesis that there are more meanings of 'relief' in Heaven and Earth, TD, than are dreamt of in your philosophy.
Or to put it prosaically 'relief' means any mechanism that saves tax.

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Replying to unearned luck:
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By Tax Dragon
10th Sep 2019 08:58

I don't know.

You may be right, but you'd help me see it if you could say which of those reliefs operates in the same way as 13(4) of the double tax treaty.

But, since in practice we'd do the same thing (declare the gains – and claim "relief" – via the HS302), we can happily continue in our respective positions … you in your conviction that you are correct, me yet to be convinced.

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Lone Wolf
By Lone_Wolf
30th Aug 2019 09:28

Great what a nights sleep and a fresh head can do for you. As Tax Dragon and unearned luck have pointed out, I was fixating with reading the immovable property part of paragraph 1 in isolation.

Reading the whole paragraph in context clear up that paragraph 1 covers only property situated in the state the taxpayer is not treaty resident in.

Moving on to paragraph 4, it then follows that immovable property in the state of residence is covered by this paragraph, as it has not already been covered by paragraph 1.

Makes perfect sense now. Thanks for all the contributions.

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By whitevanman
03rd Sep 2019 22:00

Somewhat late to the thread but not sure I agree 100%.
What 13(1) does is allows the state in which immovable property is sited, to tax any gain if that state wishes to do so (that state May...). That does not prevent the other state also taxing the gain.
So for example, a UK resident has property in Spain which is sold at a gain. The Spanish revenue may tax that gain. The UK is entitled to tax its residents on worldwide income and gains so can also tax the gain on the Spanish property ( and will of course allow DTR).
13(4) simply provides that for all other assets the country of residence has the taxing rights.
The problem for the client here is, being resident in both states, both has the right to tax gains on whatever property and wherever situated. I haven't got access to the UK/Turkey DTC so cannot comment on Article 4 (which apparently has a tie-breaker) and obviously you need to consider that to decide which state, if any has exclusive rights but clearly article 13 doesn't answer the question.

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Replying to whitevanman:
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By unearned luck
05th Sep 2019 01:53

1) Art 13 and the articles that deal with various types of income only bite if a taxpayer is resident in one contrary but has income or gains arising in the other country. If the OP's client was resident in the UK then Art 13 would determine how the gain on a Turkish property is to be taxed. But, we are told, the client is treaty resident in Turkey. The UK doesn't tax residents of Turkey on their Turkish income* and Turkey doesn't tax UK residents on their UK incomes etc (I've never had a tax demand from Turkey, have you?).
2 HMRC publishes the English language texts of tax treaties on Gov.UK where they can be downloaded for free.

*Or from anywhere else in the world other than possibly the UK.

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Replying to unearned luck:
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By whitevanman
05th Sep 2019 14:25

Sorry. Not sure what OP you are reading but the one I can see says the client is dual resident for tax purposes. It does not actually say where he/she is resident for anything else but there is a suggestion that this is someone who is what I will call a "normal" UK resident who has property in Turkey and is dual resident for tax purposes.
As stated in my previous post art 13(1) allows the country in which immovable property is sited, to tax any gain. Think what would happen to a non-UK resident who owns property here ( before any specific exceptions etc are made).
So, the gain on any Turkish real estate can be taxed by the Turkish authorities. It can also be taxed in the country in which the owner (former owner I suppose) is tax resident. In this case that also happens to be both countries so you need to look at Art 4 to find whether the time breaker answers the question.

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Replying to whitevanman:
Psycho
By Wilson Philips
05th Sep 2019 14:49

The original poster has stated that the individual is to be treated as resident only in Turkey for the purposes of the Treaty, by virtue of the Article 4 tie-breaker. I think we have to take their word that that is in fact so. Article 13(1) applies only if the property is situated in the "other" Contracting State. Since the property is situated in Turkey and the individual is resident in Turkey (and only in Turkey for the purposes of the Treaty) 13(1) is not in point.

It is 13(4) that provides that the gain will be taxable only in Turkey. If it were not for 13(4) the gain would, in my opinion, be taxable in both Turkey and the UK - not by virtue of the Treaty but by virtue of domestic tax law.

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Psycho
By Wilson Philips
05th Sep 2019 12:31

The analysis is, in my view, pretty straightforward.

The tie-breaker at Article 4 merely fixes the residence status for the purposes of the Treaty and does not disturb domestic tax law. In this case, therefore, the taxpayer is deemed to be resident in Turkey but only for the purposes of the Treaty. This means that, since the property is situated in Turkey, Article 13(1) is of no relevance whatsoever.

My problem with 13(4) is that it does not, unlike other Treaties, contain the word "only". Nevertheless, I read 13(4) as meaning that gains arising from the disposal of immovable property situated in the contracting state of residence (as decided by Article 4) shall be taxed only in that state, ie Turkey.

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Replying to Wilson Philips:
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By Tax Dragon
05th Sep 2019 12:17

With respect, that cannot be right.... or at least, cannot be the complete story.

What's the point of determining residence for the purpose of the treaty if, having done so, you then proceed to disregard the rest of the treaty as regards that residence as so determined?

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Replying to Tax Dragon:
Psycho
By Wilson Philips
05th Sep 2019 12:48

I've edited the post as I realise that I got it wrong.

The point is, though, that Treaty residence does only have effect for interpreting the provisions of the Treaty and its effects. It's a poor example but if it were not for 13(4) the chargeable gain would be taxed in the UK even though the Treaty says that the individual is resident (only) in Turkey. But he would be resident only in Turkey for the purposes of interpreting 13(1).

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Replying to Wilson Philips:
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By Tax Dragon
05th Sep 2019 12:53

One of us needs better glasses. 13(4), at least, as quoted in the OP, does include the word "only".

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Replying to Tax Dragon:
Psycho
By Wilson Philips
05th Sep 2019 14:25

Or my reference material needs to be corrected - a direct quote:

"13(4) Gains from the alienation of any property other than that referred to in paragraphs (1), (2) and (3) of this Article shall be taxable in the Contracting State of which the alienator is a resident. However, such gains which arise in a Contracting State from the alienation of property within a period of one year from the date of its acquisition may be taxed in that State"

And checking both HMRC and another reference source it does indeed appear that the above text is lacking.

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Replying to Wilson Philips:
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By Tax Dragon
05th Sep 2019 14:56

Agreed. I don't know what is being quoted in the OP, but it ain't the tax treaty as it is available to me.

However, if I am right that the way the taxpayer would avail him or herself of the tax saving afforded by the treaty is by way of a claim outside of self assessment, the lack of the word "only" is unlikely to matter. In any event, it does not change what Wolf should do.

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Replying to Tax Dragon:
Psycho
By Wilson Philips
05th Sep 2019 15:10

I consider that the word "only" is crucial. Without it, the Treaty would just confirm that the gain would be taxable in Turkey (absent any domestic exemptions which would appear to apply). It would not prevent the gain from also being taxable in the UK, with credit for any Turkish tax paid (€0 in this case, it would seem.)

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Replying to Wilson Philips:
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By Tax Dragon
05th Sep 2019 15:20

I don't disagree, though that reading renders 13(4) pretty redundant. (If it was UK law you could be more bullish... intention of Parliament, purposive interpretation yada yada yada. But treaties are not UK law and cannot be read as if they were.)

Your reading (which may be correct) wouldn't stop me making a claim under the treaty. Pass the issue of interpreting it onto the body responsible for administering it.

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Replying to Tax Dragon:
Psycho
By Wilson Philips
05th Sep 2019 15:48

But what exactly would you be claiming for if the tax paid in Turkey is zero?

(Or are you saying that you would be claiming to the UK authorities that tax shouldn't have been paid in the UK in the first place, ie seeking a discharge of the UK tax rather than, as I thought you meant, an Article 23 claim?)

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Replying to Wilson Philips:
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By Tax Dragon
05th Sep 2019 15:00

Wilson Philips wrote:

>And checking both HMRC and another reference source it does indeed appear that the above text is lacking.

Good spot by the way.

And tut-tut Wolfie. That's poor.

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Replying to Tax Dragon:
Lone Wolf
By Lone_Wolf
05th Sep 2019 15:34

I done a straight copy and paste from the treaty on the HMRC website. I'm reading off this link:

https://assets.publishing.service.gov.uk/government/uploads/system/uploa...

Where are you guys getting the version without "only"?

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Replying to Tax Dragon:
Lone Wolf
By Lone_Wolf
05th Sep 2019 15:35
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Replying to Wilson Philips:
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By whitevanman
05th Sep 2019 15:18

Sorry. Withdrawn on reading properly the OP.

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Replying to whitevanman:
Psycho
By Wilson Philips
05th Sep 2019 15:37

We have been told that "he is Turkish resident under the tie breakers". The tax analysis that follows presumes that that is an accurate statement of fact. If it isn't, then of course the analysis may change but no-one has been asked to comment on the Treaty residence position.

If we accept that the individual is Treaty resident in Turkey, then

"3(1) Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 of this Agreement and situated in the other Contracting State may be taxed in that other State"

So, translating that into the current case:

Gains derived by a resident of Turkey from the alienation of immovable property referred to in Article 6 of this Agreement and situated in the UK may be taxed in the UK. Or;

Gains derived by a resident of the UK from the alienation of immovable property referred to in Article 6 of this Agreement and situated in Turkey may be taxed in Turkey.

Nowhere does it say that a resident of Turkey will or may be taxed on property in Turkey. Likewise for a UK resident and UK property. Both of those scenarios are dealt with under 13(4) - provided that the word "only" is included therein.

[I may as well withdraw this, but I'll leave it standing.]

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Replying to Wilson Philips:
Lone Wolf
By Lone_Wolf
05th Sep 2019 15:37
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Replying to Lone_Wolf:
Psycho
By Wilson Philips
05th Sep 2019 15:39

Croner-i, an otherwise pretty reliable source, has dropped the "only".

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Replying to Wilson Philips:
Lone Wolf
By Lone_Wolf
05th Sep 2019 15:42

Do you have the reference for it? We use Croner-i but I've never looked at the tax treaties on it.

Ignore that. I've found it, and as you say, "only" isn't on the Croner-i version...

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Replying to Wilson Philips:
Lone Wolf
By Lone_Wolf
05th Sep 2019 15:48

I'm not convinced the Croner-i version is correct.

If it was, it makes the second sentence in 13(4) meaningless, and raises the question why it would have been included.

With the word "only", it then makes sense. The "other property" is taxable only in Turkey, unless the sale is of UK property, and is within 1 year of purchase.

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Replying to Lone_Wolf:
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By Tax Dragon
05th Sep 2019 15:53

Lone_Wolf wrote:

I'm not convinced the Croner-i version is correct.

If it was, it makes the second sentence in 13(4) meaningless, and raises the question why it would have been included.

With the word "only", it then makes sense. The "other property" is taxable only in Turkey, unless the sale is of UK property, and is within 1 year of purchase.

I agree.

Hence my comment above about not letting it change what I would do.

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Replying to Lone_Wolf:
Psycho
By Wilson Philips
05th Sep 2019 16:00

Lone_Wolf wrote:
I'm not convinced the Croner-i version is correct.

I'll go further - I am convinced that the Croner-i version is incorrect!

Because I agree with both you and Tax Dragon that the second sentence of 13(4) renders the first sentence nonsensical without an "only".

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