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TonyTax
TonyTax, Tax Consultant
Category: International Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Customer Question

Do the same tax rates apply as on income in the UK to dividend income and interest on investments held in Switzerland? I am domiciled in the UK.
Submitted: 3 years ago.
Category: International Tax
Expert:  Rachel-Mod replied 3 years ago.

Hello,

I'm a moderator for this topic. I've been working hard to find a Professional to assist you with your question , but sometimes finding the right Professional can take a little longer than expected.

I wonder whether you're ok with continuing to wait for an answer. If you are, please let me know and I will continue my search. If not, feel free to let me know and I will cancel this question for you.

Thank you!

Customer: replied 3 years ago.

I can wait a little longer for an answer. I note you are in the US. My question is in relation to the new UK/Switzerland double taxation agreement. Please let me know if this is outside your remit.

Expert:  Rachel-Mod replied 3 years ago.

Thank you for your patience. We will continue the search for a Professional for you.

Rachel

Expert:  TonyTax replied 3 years ago.
Hi.

In the UK, dividends are treated as paid net of a notional 10% tax credit. So, for example, a £900 cash dividend is £1,000 gross for UK tax purposes. If you are a basic rate taxpayer, you will have no further tax to pay on the dividend. If you are a 40% taxpayer, the dividend can be charged at 32.5% less the 10% tax credit and if you are a 50% taxpayer, it can be charged at 42.5% less the 10% tax credit.

Interest is taxable at 20%, 40% or 50% depending on the level of the taxpayer's total income.

The amount of foreign tax credit relief which can be given for any foreign tax paid is limited to the smaller of the foreign tax paid and the UK tax charged on that income.

Unless you are a higher rate taxpayer you will get no relief for foreign tax paid on foreign dividends since for UK tax purposes, they are treated the same as UK dividends, ie net of a 10% notional tax credit.

If you are a higher rate taxpayer, then you may get relief for some or all of the foreign tax paid depending on the amount paid and the amount allowed under the terms of the tax treaty between the UK and Switzerland.

Take a look here, here, here and here for more information on foreign tax credit relief and the Swiss situation in particular. If you wish to try to reclaim the excess tax deduction from the Swiss tax authorities you will need a certificate of UK tax residence which you can apply for from here.

I hope this helps but let me know if you have any further questions.

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