tax norway

prodrive305

Hi
I work in norway and pay tax there and none to the uk. One of the guys i work with got an accountant to do his UK tax return and seemingly the extra tax you pay in norway can be claimed back when filling in the uk tax self assesment. How can this be if we pay no tax to the uk ?

Thanks

fengirl_2

I think he has the wrong end of the stick. Norwegian tax could never be repaid by HMRC. You get credit for Norwegian tax paid against any UK tax liability on your Norwegian earnings, but that tax relief can never exceed the UK liability - the Uk cant repay tax it hasn't collected.

prodrive305

Thanks for that fengirl :-)

Cook_County

You might still get a UK refund if you claim tax credits in the UK though...

stevenc1979

I was in a similar situation a few years ago working in denmark and paying 40% danish tax.

Upon return i sent in a self assesment form along with copies of my danish tax certificates and received a large rebate

jennifernil

that is at odds with the info given in the HMRC notes re reporting foreign income and claiming double taxation relief, assuming you were not claiming tax credits here.

stevenc1979

I received danish tax certificates and was told by my employer to send in self assesment form. The UK then paid back the excess tax that I paid whilst I was working in Denmark

fengirl_2

There are no circumstances where HMRC would repay foreign tax. Foreign tax stays in foreign parts and there is no way the UK would repay something it has not had. I would guess that situations where people have had repayments of foreign tax via HMRC are where they have completed their self assessments incorrectly...and self assessment being what it is, no one checks your return, so this is unlikely to be picked up.

stevenc1979

From HMRC website


DT5977 - DT: Denmark: double taxation agreement, SI 1980 No 1960, Article 28: Miscellaneous rules

1. Where under any provision of this Convention income is relieved from Danish tax and, under the law in force in the United Kingdom, an individual, in respect of the said income is subject to tax by reference to the amount thereof which is remitted to or received in the United Kingdom and not by reference to the full amount thereof, then the relief to be allowed under this Convention in Denmark shall apply only to so much of the income as is taxed in the United Kingdom.

Basically saying you will only pay tax on the amount you would have paid in the UK anymore you will get back. And here are the countries this covers,

EEA, Reciprocal Agreement or a Double Contributions Convention countries

The countries in the European Economic Area are: Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Gibraltar, Greece, Hungary, Iceland, Republic of Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, UK.

tyllwyd

That is as clear as mud to me!!!!

But I thought the whole point of the double taxation treaties was that you don't pay tax on the same income twice in two different countries.

From http://www.hmrc.gov.uk/cnr/app_dtt.htm

"Applications and claims under double taxation treaties
If you have income from a source in one country and are resident in another, you may be liable to pay tax in both countries under their tax laws. To avoid 'double taxation' in this situation, the United Kingdom has negotiated double taxation (DT) treaties with more than 100 other countries. Each treaty is called either a 'Double Taxation Agreement' or a 'Double Taxation Convention', depending on the wording of the treaty.
...
If you are a resident of a country with which the UK has a double taxation treaty, you may be able to claim exemption or partial relief from UK tax on certain types of income from UK sources. The precise conditions of exemption or relief can be found in the text of the relevant treaty"

So my understanding was that if you had paid tax in, say Norway, you didn't have to pay tax again in the UK on the same income. So you'd only get a refund if you had paid UK tax which you didn't need to pay. I agree with Fengirl, I don't see how HMRC could give you a refund of tax it had never collected.

fengirl_2

What this means is that if your Uk tax laibility on your Norwegain income is £10,000 and you have paid the equivalent of £8000 to the Norwegian authorities, then you pay HMRC £2000.
If you have paid the Norwegian authorities £12000 however, and your Uk liability is only £10000, you do NOT get the £2000 in Norwegian tax repaid because it is not Uk tax.
I have heard of instances where people completing self assessments have entered their Norwegian tax in the Uk tax box on the return. This would result in an automatic repayment because self assessments are not checked as they are processed. if, however, the return was checked later, the error would be discovered and the taxpayer would have to repay the tax over-repaid.