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As a UK resident with a property abroad (purchased via an offshore

Resolved Question:

As a UK resident with a property abroad (purchased via an offshore company) what would be the UK tax liability in the event of the sale of said property?
Submitted: 3 years ago.
Category: Tax
Expert:  TonyTax replied 3 years ago.

Hi.

 

Can you tell me where your company is based please. Are you the owner and director? Are you a UK national?

Customer: replied 3 years ago.

The company is based in Delaware USA. The property is in Portugal. I am 50% owner and director with my wife having the other 50%

Expert:  TonyTax replied 3 years ago.

I cannot say I'm an expert in Delaware registered companies and their taxes but there is some information on the UK tax implications here and here. Your domicile may also be relevant. HMRC practice has been to only tax income distributed by the Delaware company to its members. In the tax case, the taxpayer tried to claim relief against UK tax for tax paid in the US by the Delaware company. An update to the tax case mentioned in the second link above is here. HMRC won their appeal to the upper tribunal.

 

In your case, it is the company that owns the property, not you personally, so any tax liability would be that of the company. If the company pays UK corporation tax then it will pay corporation tax on the profit from selling its assets, the property in Portugal. Given that it is a Delaware based company, it probably has no UK corporation tax liability.

 

Normally, whether an offshore company is liable to UK corporation tax depends on where it is controlled from you and you may be interested in the notes on that here. It appears that Delaware registered companies are not covered by the regular tax rules governing offshore companies controlled from the UK and I guess thats why they exist. In that case, you will only be taxed on distributions to you by the Delaware company. If you are not UK domiciled, you may choose not to remit those funds to the UK so as to avoid UK tax but leave yourself open to the remittance basis charge which you can read about here (page 54).

 

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

TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15886
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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