Double Taxation Treaties ...

[AlfredJPruffock]

What does the panel think of the following situation ?

Supposing that having been resident and domiciled in the UK , and having worked from this Tax year in the UK one leaves the UK to commence a contract in Belgium at the start of December - in Belgium the contract is via a Managment Agency which has dispensations approved by the Belgian government which means that although one pays tax in Belgium the overall tax rate is say 25 per cent - which would be less than the UK equivalent.

From the UK tax perspective, at least my understanding is that income arising
from Belgium would be taken into account when calaculating tax liablity for the atax year 2007 - 2008 - however due to the Double Taxation treaty then this income will not be taxed again by the IR - of course the assumption here is that the Belgian Tax Certificates are produced to the IR when making the assement for the tax year 2007-2008.

But is it the case that given the rate of Tax is less in Belgium due to the dispensations granted to Belgian Management Agency (They are approved by the Belgian Government) then my questiions is - could the UK IR legitimately demand the shortfall of tax which you would have been obliged to pay under the UK Taxation system (given you are still liable for UK Taxes for that year) - ie a differential of 25 per cent ?

Thanks for any light you can shed on the matter !

[NotAllThere]

AIUI, double taxation means you won't pay more than the maximum tax that you'd pay in either country. HMRC could look at the tax you've paid in belgium, compare it with the tax you would have paid in the UK, and charge you the difference.

[AlfredJPruffock]

AIUI, double taxation means you won't pay more than the maximum tax that you'd pay in either country. HMRC could look at the tax you've paid in belgium, compare it with the tax you would have paid in the UK, and charge you the difference.

Thanks for that NotAllThere - I suspected this may be the case.