Reply to: Dividends tax, living outside of the UK?

[ASB]

The country is 100% significant. For example, in Portugal, a non-habitual resident pays a flat rate of 20% personal tax and certain types of foreign income is exempt even from that. I don’t believe this is available elsewhere.

They also have a 20% corporate withholding where the underlying services are provided in Portugal.

You can get round it by having HMRC write you a letter that you are fully taxed on worldwide income which can then get you a certificate from the local portuguese tax office which can be forwarded with invoices. It is a bit of a pita.

If withholdings are made you can eventually get a certificate from the portuguese tax authorities to claim relief under the DTA.

System may have changed a little in the last few years.

[Fred Bloggs]

This is the advice the OP wants to read -

No problem with your plan what could possibly go wrong? Sure it doesn't matter a jot where you moved to, everywhere's the same, happy days.

Now here's the proper advice - Whatever your new country is, check if it has a dual tax agreement with the UK. Presuming the answer is "yes", then download and study it. I cannot vouch for your present undisclosed location but I have recently studied the UK DTA's with the UAE and Oman. They are actually quite clear and easy to understand. You will know exactly what the tax situation is in the UK and your new, undisclosed location. What it says in the DTA is what matters. Not much else really does. Download and read the DTA then ask further questions. You never know, someone may be able to help.

[MrButton]

I moved 7 months ago thanks, country is not of great importance.

Ha. Good luck.

[Alan @ BroomeAffinity]

The country is 100% significant. For example, in Portugal, a non-habitual resident pays a flat rate of 20% personal tax and certain types of foreign income is exempt even from that. I don’t believe this is available elsewhere.

[Spikeh]

I moved 7 months ago thanks, country is not of great importance.
Aware of the Estonia situation in detail, and the 5 year rule on coming back etc, thanks.

Every country has its own tax laws, so the country is indeed very important.

[WTFH]

I moved 7 months ago thanks, country is not of great importance.
Aware of the Estonia situation in detail, and the 5 year rule on coming back etc, thanks.

The country is of significance, cause many of us would relocate there, if you were telling the truth.

But tell us, what advice did you accountants give you, and what advice did you want them to give you?

[infosec]

I moved 7 months ago thanks, country is not of great importance.
Aware of the Estonia situation in detail, and the 5 year rule on coming back etc, thanks.

[WTFH]

I'd say that your accountants aren't bad, they just aren't giving you the advice you want to hear.

If you're expecting "take the 200k+ out of your business account, pop it into your personal account and leave the country", that wouldn't be the correct thing for them to say.

What country have you moved to?
Have you actually moved there yet?
In a previous thread, you were asking advice on where to move to, so I'm suspecting you haven't actually moved anywhere yet. Would I be right?

You mention Estonia. You know that e-residency isn't the same as being tax resident there? And if you do set up a company there, you'll pay 20% CT on dividends?

Maybe a bit of honesty from you might mean you'll get better answers on here.

[Lance]

I'd say its more passive aggressive.

except in General

[jamesbrown]

There's a five-year rule on dividends. Put simply, if you become non-resident, but return to the UK within five years, you'll be taxed on dividends taken during that period as though you'd taken them in the year of return. It isn't quite that simple, because it depends on your residency status prior to leaving, but that's the gist. This anti-avoidance measure applies to several other forms of tax too.

[Spikeh]

Such a beautifully hostile forum this, feel the love....

I'd say its more passive aggressive.

[infosec]

Such a beautifully hostile forum this, feel the love....

[Lance]

Firstly, in the nicest way possible, my accountants are rubbish so please don't advise me to ask them ;-)
I would however appreciate some of your battle hardened opinions on my situation please:

After 15+ years in the UK as a contractor I've moved to another European country, the current tax year is my 'cross over' year where I have lived in both the UK (2.5 months) and my new country.
From April 6th I'll only be living in my new country with the very occasional UK visit for a few days.
My new country has a tax system where I don't need to pay any tax on foreign earned dividends which I qualify for.

I'm the sole director of a UK limited company and understand I'll still have to do a UK tax return as a result.
I have £200K+ available for withdrawal as dividends.
I'd like to get the £200k+ out of the UK Ltd company in the most tax efficient manner possible.
I appreciate options around pensions, MVL/Entrepreneurs Relief etc

I shall continue to consult worldwide outside of the UK and need a company structure to do so.
So I could retain my UK limited company or go for Estonian e-residency and a company there for example.

What I can't get a straight answer to is, and any thoughts are appreciated:
Do you have to pay UK dividends tax if your not living or tax resident in the UK?
Is it a tax on a dividend being issued or a tax on a UK tax resident receiving a dividend?

Once I'm through the cross over year and no longer have any time/ties in the UK I'm unsure if using a UK limited company still leaves me paying the UK dividend tax. So is this a good way to continue to operate?
(credibility wise it's better to have a UK company in my situation is part of my thinking )

If the answer is that I won't have to pay the dividends tax from April this year, then I can issue the £200k dividend then, and continue as normal....

Thoughts welcome...

A foreign country that doesn't require you to pay tax on dividend income? Where is this utopia?
Are you sure they'd count as 'foreign earned' if you paid yourself whilst tax resident there? I doubt it.

Are you sure you can keep a UK company to contract globally? What customers do you believe would allow this?

You ask "Is it a tax on a dividend being issued or a tax on a UK tax resident receiving a dividend?" - it's the latter, although the taxable entity isn't necessarily an individual (look at pension funds).

I don't know for sure but I think you're dreaming and an MVL is probably going to be the most tax-efficient.

[Spikeh]

If the answer is that I won't have to pay the dividends tax from April this year, then I can issue the £200k dividend then, and continue as normal...

There is absolutely no way that you'll get away without paying tax due on that money - wherever you earn it.

I don't imagine HMRC would let you legitimately run a UK business if you live and (more importantly) carry the work out in another country; WHERE you do the work is the important factor - I have worked with companies based in the EU and US, but done the work from my UK home. In this instance, the tax is dealt with by the UK tax system. The only variation has been VAT - you don't charge clients outside of the UK VAT - but that also varies depending on country.

If you are resident outside of the UK (you'll need to find the definition of this as I'm not an expert) you probably won't be allowed to take advantage (!) of the UK tax system, unless you perform the work in the UK.

[northernladuk]

They are rubbish and you are continuing to pay them why?