# UK tax residency certificate



## 1434129 (Mar 10, 2017)

UK tax residency certificate and claiming tax relief on foreign interests

It's a bit confusing, so would be appreciated if someone could explain me that. If I live in the UK and

1) 
I have a UK tax residency certificate in a foreign bank, tax on interests is taken there 10% and then in the UK I can claim tax relief on interests which means 20-10=10% I have to pay 10% tax on foreign interests in the UK

2) if I do not have UK tax residency certificate so the foreign bank takes 15% tax on interests, then in the UK am I allowed to claim tax relief on interests 20-15=5% and pay 5% left in the uk tax on foreign interests or as I dont have that certificate in foreign bank, I can't not claim that 15% in the uk and pay 20%?

thanks


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## Ukkram (Aug 21, 2018)

Read the Double Tax Agreement between UK and the country you don't mention. It would probably state as most DTA's do is that the interest must be capped at 10%. 

If it is a withholding tax in that foreign country then it will not be more than 10% and it will be zero in the UK. 
In what country are you invested in?


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## Dunedin (Aug 12, 2013)

You need to be aware of a basic point about the deduction for foreign tax against UK tax: you obtain a deduction only for the reduced overseas tax that you would have borne if you had applied for the benefits of the treaty.

The following illustration might help-
•	Suppose that the standard foreign withholding tax was 25%.
•	Suppose that the tax treaty provided for this to be reduced to 10% for UK residents.
•	The UK would allow you to deduct only the 10% foreign tax against UK tax.
•	If you chose not to apply for the treaty benefits, the 15% would be your loss, and would not be deductible against your UK tax.


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## Ukkram (Aug 21, 2018)

I personally have shares on the Johannesburg Stock Exchange from which I receive dividends 4 times a year.
The SA domestic tax law requires that a withholding tax on dividends must be deducted at 20%. 

Now the DTA between Portugal and South Africa states that the tax on dividends must not exceed 15%. 
My broker in SA deducts 15% and transfers the rest to me in Portugal. In Portugal I pay zero tax on it as the DTA stated max has already been paid to SA.

The same applies to interest earned in SA but it is capped at 10% by the DTA.


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## 1434129 (Mar 10, 2017)

I meant WITHOUT UK residency tax certificated given to Polish bank if I pay tax on interests in Poland 19%, then in UK I pay 1% as I claim tax relief?

and if WITH UK residency tax certificated given to Polish bank if I pay tax on interests in Poland 5%, then in UK I pay 15% as I claim tax relief?

apparently tax certificate is only for banks as, I pay always the difference between what was paid and 20% in the UK

Am I wright?


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## Ukkram (Aug 21, 2018)

An International Certificate of Tax Residency (from UK tax office) must be sent to your bank and tax office in Poland. The bank will know how to treat your interest according to the DTA rules.

The DTA states that the Interest paid to you can ONLY be taxed in the country of residency - UK and it cannot exceed 5%. 

I have read the DTA UK - Poland 3 times and it is not quite understandable.


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## Dunedin (Aug 12, 2013)

The issue relates to the taxation of interest which arises in Poland and is received by a resident of the UK.

Article 11 of the UK Poland double tax treaty deals with the taxation of interest. In the above context, Poland is the Contracting State and UK is the other state.

Article 11(1) gives the UK, as the other state, the right to tax the interest. Article 11(2) gives Poland the right as the Contracting State also to tax the interest, but at a rate of no more than 5%.

In administrative terms, the standard rate of withholding tax on interest paid in Poland is 19%. A resident of the UK may apply to have this reduced to 5%. The individual is then taxed on the interest in the UK, with a credit for the 5% Polish tax. If the individual chooses not to apply to have the withholding tax reduced, the UK will still only give credit at the 5% rate, and not the 19% rate.


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