UK tax implications investing from Netherlands

xbionicx

Hello,

First of all I really thank you for this forum. I have learnt a lot. In particular I have reviewed the thread "Vanguard Life Strategy - Investing from abroad" from 2014 (as I am new I cannot post links) but it doesn't clarify the points I am not sure about.

I am Spanish citizen and I have been living in UK for the last 2 years. I will be permanently moving to Netherlands at the end of October. I have managed to save some money over the last 2 years and I am planning to invest it in some funds or ETFs through UK brokers (I don't want to transfer the money to € right now)

In addition to this, I will be eligible for a special tax rule in Netherlands (my tax status will be partial non resident) that will allow me to pay no taxes in any capital gains from investments (funds, ETFs, shared) abroad.

As I will be exempted to pay in Netherlands, will I have to pay in UK? I have checked the HMRC page "Tax on your UK income if you live abroad" and the taxation agreement with Netherlands but it is not clear to me if I should pay taxes on capital gains in UK if I live in Netherlands.

Along the same lines, I would like to know if you are aware of any UK broker which allows you to trade even if you live abroad. For example iWeb doesn't, unless of course you don't notify them ...

Thanks for your help

JasonPr

There's no tax on dividends or capital gains when you're no longer UK resident. You should make sure to document how you become UK non-resident. Take a look at the Statutory Residence Test at https://www.gov.uk/government/publications/rdr3-statutory-residence-test-srt

You will not be able to contribute to an ISA once you leave the UK.

If you have a personal pension (such as a SIPP) open at the time you leave, you can make contributions for 5 more years and receive "tax relief" (free money). You can pay in £2880 per UK tax year and get £720 from the government.

xbionicx

Thanks JasonPr.

Finally I have decided to open a share ISA (I will transfer my cash ISA) before I leave. I won't be able to contribute but I can keep the money I already have

themanfromamarillo

I lived in the Netherlands for 3 years under the 30% rule. During this I just paid UK income tax on the interest in my savings account and didn't declare it in my Dutch income tax return (because I was legally allowed to). I had a UK cash ISA that I also didn't need to declare and hence paid no tax on the interest in that.

One note, the Dutch don't tax you on income from dividends and shares but on a nominal income from them. You declare your savings in Box 3 of the income tax form (so for me under the 30% this was whatever was in my Dutch savings account), they then assume you get 4% return on that and tax about a quarter of that theoretical return. Basically you pay 1.25% wealth tax on any assets above some threshold (20k when I was living there).

xbionicx

Thanks the manfrommamarillo.

I will be under the same conditions (30% ruling).

Regarding the 20k tax free allowance (next year will be 25K€). Do you know if it is accumulative like the ISA in UK? As far as I have understood it is not accumulative.

themanfromamarillo

I don't think it is accumulative. The example on the belastingsdienst site (in Dutch) basically says subtract liabilities from assets, subtract the tax free allowance (in the example it's a couple so it's 2x that allowance), take 4% as nominal income and then work out 30% tax on that nominal income.http://www.belastingdienst.nl/wps/wcm/connect/bldcontentnl/belastingdienst/prive/inkomstenbelasting/heffingskortingen_boxen_tarieven/boxen_en_tarieven/box_3/box_3

Edited to add, the system changes next year. The 4% nominal income will be replaced by a sliding scale where people with less assets will be assumed to get a lower nominal return, increasing to 5.5% nominal return for the wealthiest
http://www.belastingdienst.nl/wps/wcm/connect/bldcontentnl/belastingdienst/prive/vermogen_en_aanmerkelijk_belang/vermogen/belasting_betalen_over_uw_vermogen/grondslag_sparen_en_beleggen/berekenen_belasting_over_uw_inkomsten_uit_vermogen_vanaf_2017

I suppose that makes some sense as if you have less money you take fewer risks so your return will be lower

xbionicx

Thanks again

The new way of calculating is more complex but as you said it makes more sense.

I have another question regarding the taxes on box 3. As I will be considered partial non resident tax payer, will I have to pay taxes on the interests from from Dutch funds, ETFs or stock?

I keep reading that I will be exempted of any income in box 3 (international or Dutch) as I will be granted with the 30% ruling. Although I called the Belastingdienst and they told me I will only be exempted of international income but I will have to pay for the interests from Dutch funds, etfs or stocks. What is right from your experience?

I really appreciate your help

themanfromamarillo

I declared my Dutch savings account but it was under the threshold, but I could've made an error doing that.

There should be some explanatory notes on this on the Belastingdienst website. If not it should be clear on the tax form what you need to declare. If not, double check with the Belastingdienst or get an accountant (I'm just a bloke on an internet forum not a tax professional).

Note when I did the standard Dutch tax forms 8 years ago or so they were pretty long but 90% of the pages cold be skipped if you weren't the captain of a ship and at the same time an international athlete.