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TaxRobin
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Experience:  International tax
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I am about to marry a non uk citizen (Taiwanese). She wants

Resolved Question:

I am about to marry a non uk citizen (Taiwanese). She wants to bring some of her capital (approx £250,000) into the country to set up a business. Can the government tax the incoming money? Or do the government only tax the earnings once the money is in the UK.
Submitted: 2 years ago.
Category: Tax
Expert:  TaxRobin replied 2 years ago.
Hello,
Your UK tax liability depends on where you are 'resident' and domiciled' in a tax year.
If she is not domiciled in the UK or ordinarily resident in the UK then her income from abroad would not be taxable in the UK.
The UK and Taiwan have a tax treaty in place that protects from Double Taxation.
For Business profits
(1) The profits of an enterprise of a territory shall be taxable only in that
territory unless the enterprise carries on business in the other territory through
a permanent establishment situated therein.
Until she is a resident or sets up her business in the UK the money would not be taxable to her.

If your fiancee is bringing this in the form of cash, she will need to declare the money.
Customer: replied 2 years ago.

Hello,



I dont know that you have answered my question, but that may because I don't know some of the technical terms (e.g. What is the difference between domicile and resident? What does 'taxable to her' mean) so I'll try to be more specific.



The plan is to transfer the money to a bank account that she already has in the UK (she studied here and kept the account open so she could access cash easily when visiting). Can the government tax any of the transferred money when it is electronically deposited into the bank account from Taiwan? A bit like the import duty I ended up paying on a birthday present she sent from China.



I could do with some help translating the following into ordinary English "The profits of an enterprise of a territory shall be taxable only in that territory unless the enterprise carries on business in the other territory through a permanent establishment situated therein"



What is meant by "enterprise" in the above? Is this a person or a business or the stuff a person does to make a living when self-employed or something else? In relation to the previous question what does a 'permanent establishment' mean



Once she is living here I presume she will have to pax tax on "earnings", (e.g. on interest earned on the capital, salary, profits from business etc.) but I can't work out from what you have written whether she is liable to pay tax on the capital itself. "Until she is a resident or sets up her business in the UK the money would not be taxable to her." is rather ambiguous in this respect. She is going to be here, hopefully with a business, so does that mean she will or will not have to pay tax on the capital she has transferred into the country?



Expert:  TaxRobin replied 2 years ago.
Hi,
Domicile is your home where as residency is where you are living.
If she has not been in the UK and was not already established in the UK then no tax would be applied to any of her money.
Of course if she has been living in the UK and brings this income over then that changes.
"The profits of an enterprise of a territory shall be taxable only in that territory unless the enterprise carries on business in the other territory through a permanent establishment situated therein"
The above relates to her profits from any business in Taiwan. Once she is in the UK , invests to start a business , the profits of the UK business are taxable to her.

If she is not a resident yet the money for capital woudl not be taxable in the UK.
Customer: replied 2 years ago.
"Of course if she has been living in the UK and brings this income over then that changes". Does studying here and visiting here count? She finished her studies a few years ago.

If she transfers the capital before she moves here then she does not pay any tax on the capital. Is that right? Subject to the previous

"If she is not a resident yet the money for capital woudl not be taxable in the UK". What happens if she transfers the capital from Taiwan after she moves here?
Expert:  TaxRobin replied 2 years ago.
Visiting no but studying could. If an individual’s home has been abroad and they have come to the UK for less than two years for a period of study or education, they might not be resident in the UK.
If the individual has come to the UK for more than two years but less than four years for study or education, they will be resident in the UK while they are here. That would mean income earned while in the UK would be taxable to the extent it was in the UK. This is because the earnings are from a UK source and are liable to UK tax whether or not they are resident in the UK.
If she is not a deemed resident nor earned the £250,000 while a resident it will not be taxable to her when she moves it to the UK. This is true even if she moves it after establishing her residency.
The treaty between the UK and Taiwan cover her for the profits from that business. Those profits were earned from a company that was established and resident in Taiwan.
When she transfers the only tax that could be applied would be on interest that she earns and from the business that she starts in the UK.
The capital will not be taxable to her in the UK.
Customer: replied 2 years ago.
Given that she was a student in the UK for less than two years and she had no UK based income (her sole source of income was from a Taiwanese company, based in Taiwan with no UK connections, and taxed there) am I right in concluding that the capital she transfers to the UK is not taxable but the UK earnings are irrespective of when she transfers the capital to the UK.
Expert:  TaxRobin replied 2 years ago.
Yes, you are correct.
I know that the situation is complex especially as she was present in the UK but you are correct in your summary.
The tax treaty covered her earnings in Taiwan while she was in the UK as a student. The profit is still covered by the treaty.
When she brings it to the UK, the earnings will be taxable to her in the UK. The business she starts in the UK will be under UK taxation.
Customer: replied 2 years ago.
Thanks
Expert:  TaxRobin replied 2 years ago.
You are most welcome.
My goal is to give you excellent service.
Rating lets JustAnswer know you were assisted and credits me for the time.
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Category: Tax
Satisfied Customers: 13614
Experience: International tax
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