Double Taxation CGT for UK resident

Hi

Paddy is a UK resident and is selling some land in Ireland. The gain since purchase 4 years ago will be circa £400k. Does anyone know the process regarding the Tax Clearance Certificate CG50a, and also whether Paddy pays his CGT in the UK first, then offsets in Ireland or vice-versa?

This is the reason for asking: According to the Revenue.ie website, he can only get the CG50a if resident (not), if there's no CGT liable (it is) or if CGT is fully paid - so how does he do this if he's non-resident and availing of the Double Taxation rules?

Paddy does not want the other alternative, which is for the purchaser to withhold 15% of the purchase price, then Paddy reclaims.

Can anyone help?

regards

Paddy

Paddy can probably afford to pay for professional advice to help him out.

Irish land is subject to Irish CGT irrespective of the residence of the vendor.

So Paddy will pay Irish CGT, he may then be subject to CGT in the UK and claim relief under the Ireland/UK taxation treaty to get a credit for the tax already paid.

On the basis that Paddy has made £400,000 the Irish CGT will be approx €150k so €1,000,000 price will cover the CGT.

Paddy should also consider the Windfall tax implications of the disposal.

Thanks Joe 90.

Paddy's professional advisor is a bit slow in coming back to him, and the Easter break is a long time to be thinking it all over!

The land is pure farmland and being sold as such - so he assumes there would be no Windfall tax?

>>> so €1,000,000 price will cover the CGT <<<<

Do you mean by a 15% deposit on the sale?

thanks

Paddy

There will be no UK liability as UK CGT rates are lower and annual allowances higher.

Your liability will be the exact same as the liability if you were Irish resident.

You still need to report the sale on your UK tax return - claiming relief for Irish tax paid.

paddytt said:

Do you mean by a 15% deposit on the sale?

Click to expand...

The €150k figure quoted by Joe isn't to be taken as 15% of the sale price, it's the approximate value of 33% of profit (less the small €1,270 annual CGT tax-free allowance).

So more precise figures would be £400,000 profit is €486,000 at an exchange rate of £1 = €1.215. The taxable amount would be €486,000 less €1.270 - or €484,730.

Therefore, CGT due in Ireland would be €159,960.90.

Does anyone know anything about the CG50a, and how can I get one to avoid the purchaser having to withhold 15%....?

thanks

Paddy

The following are the three conditions, any one of which must be met:

The person making the disposal is Resident in the State.

No Capital Gains Tax is payable in respect of the disposal.

The Capital Gains Tax Liability has been paid.


As you can see, in your situation, what you need to do to get a CG50a is pay your €159,960.90.


Sent from my iPhone using Tapatalk

Got the following answer from the Revenue (it's in their Tax Briefing 2005 Archive online) - no need to pay in advance, wayhayyyy!

>>>> A non-resident vendor can obtain a Capital Gains Tax Clearance Certificate where the capital​

gains tax payable on the disposal (and any earlier disposals by him or her on the same​

asset) has been paid in full (Section 980(8)TCA 1997).​

If the vendor does not have sufficient funds to pay the liability in advance of the disposal​

Revenue will accept a written undertaking from the solicitor acting for the vendor to discharge the liability (and any earlier unpaid tax on his/her disposal of the same asset) from the sale proceeds of the transaction concerned. This undertaking should be on the solicitors headed notepaper, signed and contain the name & address of the vendor, the PPS number if​

available, the amount for which the undertaking is given and the date by which the payment​

will be made. It should be submitted with the application.​

A payment in satisfaction of an undertaking should be submitted, without request, to the​

Revenue office which issued the certificate​

​

​

​

undertaking and the vendor's PPS number which will be available from the certificate.