Article Of The Countries Double Taxation Agreement

Example of benefit from the double taxation convention: Suppose interest on NRAs [clarification required] bank deposits draw 30 percent tax deduction at source in India. Since India has signed agreements with several countries to avoid double taxation, the tax can only be deducted at 10-15% instead of 30%. You may have to pay taxes in both the UK and another country if you live here and have income or profits abroad, or if you are a foreigner and have income or profits in the UK. This is called “double taxation.” We will explain how this can be done to you. The agreement on the prevention of double taxation between India and Singapore currently provides for a tax based on the residence of the capital gains of a company`s shares. The third protocol amends the agreement effective April 1, 2017, which provides for a tax at the source of capital gains from the transfer of shares of a company. This will reduce revenue losses, avoid double non-taxation and streamline investment flows. In order to ensure the safety of investors, equity investments made before April 1, 2017 were processed in accordance with the benefit limitation clause provided by the 2005 Protocol, in accordance with the terms of the benefit limitation clause. In addition, a two-year transitional period was provided between April 1, 2017 and March 31, 2019, during which capital gains on shares in the source country are taxed at half the normal rate, subject to compliance with the terms of the benefit limitation clause. It is also possible that more than two countries are involved. For example, a national of a country living in the United Kingdom with foreign income from a third country.

It is much more common to seek the services of a qualified and experienced accountant to seek tax breaks through double taxation agreements. Fees vary depending on the complexity of an individual`s personal life, in almost all cases, the tax savings far exceed all the costs of using an accountant – and they can be sure to pay the correct amount of tax with total confidence. Cyprus has 45 double taxation agreements and is negotiating with many other countries. Under these agreements, a credit is normally accepted against the tax collected by the country in which the taxpayer is established for taxes collected in the other contracting country, resulting in the taxpayer not paying more than the higher of the two rates. Some contracts provide for an additional tax credit that would otherwise have been due had it not been provided for incentives in the other country, which would have resulted in an exemption or tax reduction. You cannot claim this facility if the UK Double Taxation Convention requires you to collect taxes from the country from which your income comes. The table below shows countries that have entered into a double taxation agreement with the United Kingdom (as of October 23, 2018). On the UK government`s website, you will find an updated list of active and historic double taxation conventions. According to a study carried out by Business Europe in 2013, double taxation remains a problem for European SMEs and a barrier to cross-border trade and investment.

[9] [10] Problems include limiting the ability to deduct interest, foreign tax credits, stable settlement issues, and differences in qualifications or interpretations. Germany and Italy have been identified as the Member States where most cases of double taxation have been identified. When taxes are due in both countries, the credit will be limited to the lower taxes of the United Kingdom and the tax debt of the country of origin to the same income, which means that in the end you will always pay with the highest rates. That`s why we offer a first free consultation with a qualified accountant who will give you answers to your questions and help you understand if a double taxation agreement could apply.