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Tax query overseas client

Tax query overseas client

I have had a query from a client based in Cyprus looking to relocate to the UK with his family (runs own web design business). He intends to send this son to private school and wants to pay the school fees from the business (will not be able to justify this as a business expense). If he takes a dividend/ withdraws money from the business and brings it into the UK, will he have to pay any UK tax on it?

Also if he starts to run the business from the UK, will the company have to pay corporation tax?

Is there any way he can bring money from Cyprus in to the UK without having to pay any tax on it.

Is their any useful guidance on tax related issues for overseas settlers to the UK, the HMRC guidance is very long and complicated!

Any advice will be greatly appreciated.



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02nd Dec 2012 09:49

If your client comes to the UK to live, then if he is in UK for 183 days in a tax year he will be IK resident.


However, if he intends to stay permently, then from he will be treated as resident in the UK for that tax year. Under an ESC, he will qualify for "spit" year treatment, and from that point be liable for UK tax on worldwide income. So if he pays a dividend after that date, he will be liable to UK tax on it, if applicable


Remember that if he owns less than 10% of the comany, (unlikly) that he will get a 10% tax credit on the dividend, or if there is a non discremination clause in the tax treaty - which there is with Spain, Remember there may be Spaish witholding tax.


He may be able to claim the remittance basis on his company, though, which would mean that he would only pay tax on monies on income or capital gains arising after becoming UK resident remitted into the UK after his arrival. Would it be worthwhile to vote the dividends before he comes to the UK.


So, he could vote the dividend before he comes, claims remittance basis etc.

Remember, if using the remittance basis, there is the need to keep seperate bank accounts etc.


Finally, there is the possiblity of the Spanish company being subject to CT if is managed or controlled from UK - but that is beyond my expertise to comment on if it applies here!



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02nd Dec 2012 11:21

I think your penultimate paragraph says it all - this is a very long and complicated subject. I don't think you should be advising your client based on information received on a forum however well intentioned and expert.You need proper advice from someone who is aware of all the facts in my opinion. This is way more than a simple question.

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05th Dec 2012 13:52

Agree with Gerry

I agree that you need to get detailed advice from someone with experience in this area; cross-border tax issues, residence and domicile are just not areas of tax that can be sorted out on the basis of 'guidance' (whether from HMRC or otherwise).

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