Luxemburg - tax haven for shares

searcher30

i read with interest that luxemburg is a tax haven with regard to people who pay themselves dividends from shares. is this definitely the case and how does this work? can you have shares in the uk but somehow invest them in luxemburg? thanks in advance.

Chrismaths

Short answer: no

Long answer: Nooooo

Assuming you are resident and domiciled in the UK, you would get no benefit from holding shares offshore. If you live in the UK, the only case in which you would see a benefit is if you were domiciled elsewhere, didn't remit funds back to the UK, and were a HR taxpayer (or made gains in excess of your CGT exemption).

Residence = where you are this tax year
Ordinary Residence = where you live
Domicile = where you are from

HTH.

Cook_County

I do not necessarily agree with chrismaths:

1. Offshore roll-up funds have the benefit of gross roll-up not available onshore.

2. Some kinds of investments (eg hedge funds) are not available in the UK at all.

3. Foreign dividends may well attract notional tax credits following the decision in the Manninen case.

4. Non-UK domiciliaries can avoid tax entirely.

Chrismaths

The OP said:

with regard to people who pay themselves dividends from shares.

1. How would a gross roll up fund help? By definition, they don't pay dividends.
2. If you are domiciled in the UK, and the fund is a non-distributor, you will pay income tax on the capital gain. If it is a distributor, you pay tax on the income.
3. Not familiar with this case - but currently, ETFs (which are on the whole Dublin-based) pay their income gross, so losing the 10% tax credit. So dividends from these funds are taxable on a BR taxpayer at 19% instead of 10%. From what I understand, this would only bring them back into line with the UK, tax-wise.
4. I said:

you would see a benefit [...] if you were domiciled elsewhere

Looks like you agree with me more than you think.
The OP was from my reading of it simply trying to avoid tax on UK shares by putting them offshore. This won't work, unless the conditions I laid out are satisfied. (and even then, are probably not worth the costs unless it is a serious amount of money.)

searcher30

Cook_County wrote:

I do not necessarily agree with chrismaths:

1. Offshore roll-up funds have the benefit of gross roll-up not available onshore.

2. Some kinds of investments (eg hedge funds) are not available in the UK at all.

3. Foreign dividends may well attract notional tax credits following the decision in the Manninen case.

4. Non-UK domiciliaries can avoid tax entirely.

what do you mean by :
4. Non-UK domiciliaries can avoid tax entirely.
does this mean not domiciled in the UK? thanks!

Cook_County

Please refer to chrismaths answer #2 above, as to domicile.