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HMRC internal manual

PAYE Manual

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HM Revenue & Customs
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PAYE operation: double taxation claims submitted by non resident individuals: country specific aspects

Special considerations are required when processing a double taxation claim made by an individual resident in any of the following countries

 

Australia

Relief from UK income tax is only available to permanent visa holders of Australia. Relief for temporary visa holders of Australia can be given up to and including 30 June 2006 - no relief can be given after 30 June 2006. Therefore, you need to establish if the individual is a permanent or temporary visa holder in Australia when deciding if relief is due. This information could be provided in any of the following 3 ways

  • The certification box on page 1 of the claim form might be ticked
  • A letter from the Australian tax authorities may accompany the claim form and this may specify what type of visa the individual holds
  • Part B, question 3 of the claim form asks if the individual holds a temporary residency visa

British Virgin Islands

Unlike in most countries, a resident of the British Virgin Islands is unable to obtain certification of residence by the BVI Authorities for the purpose of the DT claim form.

As such, an individual is required to provide a statement regarding their residence status with their completed DT claim form.

Thus, all claims by an individual should be referred to PT International Advisory (DT), Room 240 St John’s House, Merton Road, Liverpool L75 1BB.

Cayman Islands

Unlike in most countries, a resident of the Cayman Islands is unable to obtain certification of residence by the Cayman Islands Authorities for the purpose of the DT claim form.

As such, an individual is required to provide a statement regarding their residence status with their completed DT claim form.

Thus, all claims by an individual should be referred to PT International Advisory (DT), Room 240 St John’s House, Merton Road, Liverpool L75 1BB.

Germany

Current DTC

  • With effect from 6 April 2011 for pensions and annuities (see ‘Note 2’ below)
  • With effect from 1 January 2011 for property income, dividends, interest, royalties (and annuities not subject to PAYE)

UK Pensions / Annuities

Relief from UK income tax is only available for UK pensions / annuities which arise from UK tax relieved contributions made for 15 years or less.

If the above conditions are not met, no relief is due and the UK pension / annuity remains fully chargeable to UK tax.

Thus, if an individual makes a claim to relief under the terms of the current DTC, they are required to provide the additional information requested in the ‘Helpsheet for residents of Germany’ which would have accompanied the DT claim form.

Note 1: If the additional information is not provided, the DT claim should be returned as ‘incomplete’.

All fully completed DT claim forms by an individual should be referred to PT International Advisory (DT), Room 240 St John’s House, Merton Road, Liverpool L75 1BB.

Note 2: Election for terms of previous DTC to apply.

An individual may elect for the terms of the previous DTC to apply to their UK pension / annuity.

For the terms of the previous DTC to apply, the following conditions must be met

  • The individual must formally elect for the terms of the previous DTC to apply to their UK pension / annuity
  • The UK pension / annuity must have commenced before 30 December 2010 
  • The UK pension / annuity must be subject to tax in Germany 
  • The UK pension must not be a

    • UK Government pension

    A National Health Service (NHS) pension paid by CAPITA or the Paymaster General is treated as a non-government pension under most double taxation agreements. However, under the previous UK / Germany agreement, the NHS pension is treated as a government pension, and no relief is available

    • UK Local Authority pension

Israel

Relief from UK tax may be restricted if the individual is entitled to special tax benefits under Israeli tax laws.

As such, all claims by an individual should be referred to PT International Advisory (DT), Room 240 St John’s House, Merton Road, Liverpool L75 1BB.

Further information is available in the Double Taxation Manual at DT10050 or the International Manual at INTM345600.

New Zealand

  • The New Zealand tax authorities apply a special concession to pensioners moving to New Zealand permanently. This concession gives the individual relief from New Zealand tax for the first 4 years of residency. The concession is given under domestic New Zealand tax law, not under the double taxation agreement between the UK and New Zealand
  • The New Zealand / Individual claim form can cause confusion because although New Zealand is not a subject to tax country, the form asks for ‘the date the individual paid, or will have to pay, tax in New Zealand’. The individual may have entered this date as 4 years after they became resident in New Zealand, in accordance with the special concession described above
  • When processing the claim form, we are only concerned with the date the individual became resident in New Zealand for tax purposes and the date the income commenced. We are not concerned with the date the individual paid, or has to pay, New Zealand tax on the income
  • The effective date of exemption will be either the date they became resident in New Zealand, or the date of commencement of the income, whichever is later

Qatar

Unlike in most countries, a resident of Qatar is unable to obtain certification of residence by the Qatari Authorities for the purpose of the DT claim form.

As such, an individual is required to provide a statement regarding their residence status with their completed DT claim form.

Thus, all claims by an individual should be referred to PT International Advisory (DT), Room 240 St John’s House, Merton Road, Liverpool L75 1BB.

Saudi Arabia

Unlike in most countries, a resident of Saudi Arabia is unable to obtain certification of residence by the Saudi Authorities for the purpose of the DT claim form.

As such, an individual is required to provide a statement regarding their residence status with their completed DT claim form.

Thus, all claims by an individual should be referred to PT International Advisory (DT), Room 240 St John’s House, Merton Road, Liverpool L75 1BB.

Sweden

Where the individual is a national of Sweden, full relief can be given on all pensions including government pensions, state pension, incapacity benefit, trivial commutation payments and pension flexibility.

Where the individual is not a national of Sweden, no relief is available for government pensions. The amount of relief available for occupational pensions, pension lump sums (formerly known as trivial commutation payments), pension flexibility, state pension and incapacity benefit is restricted to one-fifth of the gross amount of that income.

Full relief is available for interest and royalties income, regardless of the nationality of the individual.

Further information is available in the Double Taxation Manual at DT18001 or International Manual at INTM345600.

Former states of Yugoslavia

Bosnia-Herzegovina, Croatia, Montenegro, Serbia and the Serbian provinces of Kosovo and Vojvodina

A National Health Service (NHS) pension paid by CAPITA or the Paymaster General is treated as a non-government pension under most double taxation agreements. However, under the terms of the UK / Yugoslavia agreement, it is treated as a government pension. This agreement still remains in force between the UK and the former Yugoslav states listed above. Therefore the NHS pension is always treated as a government pension for residents of these former states. Relief can be given if the individual is a resident and national of that country.

Macedonia and Slovenia

Macedonia and Slovenia were also former Yugoslav states. However, they have had their own agreements in place since 6 April 2008 and 6 April 2009 respectively. Under these agreements, the NHS pension is classed as a non-government pension if it is paid by CAPITA or the Paymaster General.