CGT due in the UK? Sale of property (land) in Germany

georges11

Hi.
The facts:
- I am self employed,
- German Citizen but have been living in the UK for more than 10y and pay my taxes in the UK. I have a settled status in the UK.
- I own land (without any buildings) in Germany which I would like to sell
- As per German law my tax due in Germany for this would be €0 (If you own property a certain number of years in Germany then the tax is 0)
- There is a double taxation treaty between Germany and the UK which states that I can be taxed in Germany for the gains of this sale (https://www.bundesfinanzministerium.de/Content/DE/Standardartikel/Themen/Steuern/Internationales_Steuerrecht/Staatenbezogene_Informationen/Laender_A_Z/Grossbritannien/2010-11-23-Grossbritannien-Abkommen-DBA-Gesetz.pdf?__blob=publicationFile&v=3). Article 6 and 13 are the relevant ones.

- A family member in Germany feels that I should not be due for tax in the UK due to this treaty, he feels it overrides UK national law (being an international treaty)
- From research in the internet my understanding is that there is still CGT due in the UK as I pay tax there and within the UK my worldwide income/gains are taxable.

My question:
Who is right, is tax due (and needs to be declared on the self assessment form)? Or does the taxation treaty excempt me from tax in the UK in this case?

Thanks a lot in advance for your advise!

Grumpy_chap

AIUI, double taxation treaties only serve to prevent the individual from paying tax twice.

Say an event would mean tax £5k in country A or tax £10k in country B. 
Double taxation means you would pay £15k.
Treaty means you deduct the £5k paid in country A from the £10k liability in country B.  So total tax paid is no higher than the highest rate that would apply between the two countries.

I am sure someone will explain this better than I have.

Jeremy535897

Article 13(1) in English says:
1) Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.

What this means is that  both the UK and Germany may choose to tax capital gains made by a UK resident on the sale of immovable property (as defined in Article 6) in Germany (the default position for gains is that only the country of residence can tax capital gains, which is the UK). If both do, the UK gives credit for the German tax paid (up to the amount of UK tax payable).

In this case it is beyond doubt that the gain is taxable in the UK. This is typical of the vast majority of double tax agreements based on the OECD model.

georges11

thanks for the responses. Very helpful