How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask TonyTax Your Own Question

TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15841
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
13905389
Type Your Tax Question Here...
TonyTax is online now

As from April 2015 , a foreign citizen selling a property in

Resolved Question:

As from April 2015 , a foreign citizen selling a property in UK is subject to Capital Gains Tax in UK. This only applies to gains made from April 2015, therefore negligible.
However, is he also liable to Capital Gains Tax in his country of domicile? I refer to citizens of Malta. Malta has a double taxation agreement with UK.
In Malta Capital Gains Tax would be levied at a flat rate of 10 percent on the whole selling price of the property, which is a lot more than what he would pay in UK at this early stage.
My suspicion is that the Maltese citizen would be liable to pay the difference between the two amounts, ie between the UK capital gains and Maltese capital gains.
Thank you for your comments.
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. Can you tell me where the Maltese citizen is tax resident please.
Customer: replied 1 year ago.
In Malta. He is a 100% Maltese citizen and pays all his taxes in Malta, where he resides permanently.
Expert:  TonyTax replied 1 year ago.
Thanks. Leave this with me while I draft my answer.
Customer: replied 1 year ago.
OK, thank you. I realise it is quite complicated and Im ready to wait a bit for a well researched answer.
Expert:  TonyTax replied 1 year ago.
Hi again. Capital Gains on property are dealt with in Article 13 of the UK/Malta double tax treaty, specifically paragraph 1. Double tax relief is dealt with in Article 22, specifically paragraph 2. See paragraph also. As you know, a non-UK resident individual can use the 5 April 2015 value of the UK residential property as the cost for UK CGT purposes. Look here and here for more information. I'm no expert on Malta tax law but if you say that the rate of CGT is 10% on the selling price and there is no UK CGT to offset, then the Maltese CGT will be the full 10%. That's the way double tax relief works in the UK. The country of residence of the individual is where the offset of foreign tax occurs. More often than not, some tax is paid in each country but different ways of taxing income and gains and different tax rates clearly affect what amount of tax, if any, is paid where. I hope this helps but let me know if you have any further questions.
Customer: replied 1 year ago.
Therefore are you confirming that an OFFSET is envisaged in the law, ie the highest amount is always applicable?
From your answer, I understand that after paying in the UK, the individual is taxed for the difference between the two countries' amounts and he pays the difference in Malta. Is this correct?
Expert:  TonyTax replied 1 year ago.
The offset is £ for £. The percentages cannot be used as the taxable gain may be different in each country. The Maltese tax would not be offset against the UK liability. As I stated in my previous post "The country of residence of the individual is where the offset of foreign tax occurs."
If the Maltese tax was £1,000 and the UK tax was £0, the Maltese liability would be £1,000. If the UK tax was £250, there would be £750 to be paid to the Maltese government. The UK liability would still be £250.
If the Maltese tax was £1,000 and the UK tax was £2,000, the Maltese liability would be £1,000 but there would be nothing to pay to the Maltese government as it would be covered by £1,000 of the UK tax paid. The UK tax would still be £2,000.
Customer: replied 1 year ago.
Thank you, understood. A very happy New Year to you.
Expert:  TonyTax replied 1 year ago.
Thanks and the same to you.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15841
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
TonyTax and other Tax Specialists are ready to help you

What Customers are Saying:

 
 
 
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
< Previous | Next >
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP
  • I couldn't be more satisfied! This is the site I will always come to when I need a second opinion. Justin
  • Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around. Esther
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
 
 
 

Meet The Experts:

 
 
 
  • Sam

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
< Previous | Next >
  • http://ww2.justanswer.com/uploads/TA/Tax Expert/2013-8-21_231010_sam.64x64.jpg Sam's Avatar

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
  • http://ww2.justanswer.com/uploads/BI/bigduckontax/2013-8-12_222058_1.64x64.jpg bigduckontax's Avatar

    bigduckontax

    Accountant

    Satisfied Customers:

    2333
    FCCA FCMA CGMA ACIS
  • http://ww2.justanswer.com/uploads/TA/TaxRobin/2013-8-28_16186_femalebusinessprofessionalbinderhand11038485.64x64.jpg TaxRobin's Avatar

    TaxRobin

    Tax Consultant

    Satisfied Customers:

    524
    International tax
  • /img/opt/shirt.png taxadvisor.uk's Avatar

    taxadvisor.uk

    Chartered Certified Accountant

    Satisfied Customers:

    2845
    FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
  • http://ww2.justanswer.com/uploads/MS/MsAM/2012-6-9_16426_anna.64x64.jpeg Anna's Avatar

    Anna

    Teacher, writer, biologist

    Satisfied Customers:

    270
    Great research skills, variety of work experiences, teaching experience.
  • http://ww2.justanswer.com/uploads/PD/pdheslin/2012-6-6_232056_pambig.64x64.jpg pdheslin's Avatar

    pdheslin

    Consultant

    Satisfied Customers:

    51
    20+ years of internet site creation and search engine optimization. Dozens of search tools at my disposal.
 
 
 

Related Tax Questions