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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4340
Experience:  FCCA FCMA CGMA ACIS
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I am a resident of Luxembourg and I am wanting to draw monies

Customer Question

I am a resident of Luxembourg and I am wanting to draw monies out of a UK company
to pay for a residence in Luxembourg. Am I entitled to draw the money out of the
UK company bearing in mind that I work and live in Luxembourg and that I would be
expected to pay Luxembourg Tax rates on this money. Surely I cannot pay tax twice?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I am Keith, one of the experts on Just Answer and pleased to be able to help you with your question. Drawing the money out of a UK company could cause problems. If you are a director of this company than you are an employee per se and any remuneration must be paid under PAYE arrangements and appropriate Income Tax and National Insurance deducted. If you take it out as a dividend then a notional tax of 10% is applied. If you are not a director then you could bill the company for services rendered to match the withdrawal. The first option involves UK tax, but as an EEA citizen you are entitled to a personal allowance of 10.6K before Income Tax strikes. The second the notional dividend rate and the third no UK tax at all as you are resident in Luxembourg. The first and third methods are allowable against the Company's Corporation Tax, but the dividend is not. There is a Double Taxation Treaty between the UK and Luxembourg which precludes the same income Stream being taxed in both jurisdictions. This is achieved by means of tax credits and any tax deducted in the UK would be allowable against Luxembourg tax. Thus whichever way you choose to take money from the Company you are not taxed twice. However, the Treaty does not protect you from differences in rates of taxation. I do hope that I have set your mind at rest on this matter.