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CyprusLawyer101

Mentor Group Gold
Do you really think his case is different than this one?


Ok we are talking about Italy and not US but the article 4 between UK and IT is exactly the same.

d1nBUa.jpg


Here's what i'm talking about

vN4pyt.jpg
Hmmm.. The case you are quoting is indeed rather parallel to the case at hand and it is good that you bring this into light.
Having said that, I am still not sure I agree with the court's decision as to the fact that because the foreing sourced income only becomes taxable upon remittance that such person may not be deemed a tax resident of UK for the purposes of the treaty. The treaty applies to tax residents of a particular country ; the fact that the type of tax residency provides some special conditions does not make the person a non tax resident. It would have been an acceptablr argument if no taxation wqs applied at all to the non dom but since taxability was effective when income was remmitted then I do not see how the person may not be regarded as tax resident. The remmittance basis of taxation is based on the premise that one becomes resident in the country and by virtue of such residency he is able to claim the particular benefits of non dom. I believe that the Italian court was affected by the particular circumstances of the individual and how his position was interpeted under Italian domestic law and this may have prompted it to reach a slightly outstretched conclusion with respect to Treaty interpetation. I may be wrong. Also particular circumstances are of vital importance it appears. Irrespective of my counter argument, this case is very important and instrumental as to the potential treatment for such cases by domestic courts. Thank you for sharing.
 

marzio

Entrepreneur
As of today the majority of double tax treaties include this line "This term does not include any person who is liable to tax in that contracting state only if he derives income from sources therein"

If you think about it one second and ask "why would they include that line?"

The only answer that comes to mind is that they want to prevent to be considered resident for double tax treaty purpose any person that is taxed only on local source income.
 

Asterion

New member
Do you really think his case is different than this one?


Ok we are talking about Italy and not US but the article 4 between UK and IT is exactly the same.

d1nBUa.jpg


Here's what i'm talking about

vN4pyt.jpg
Ok, the bigger screenshot finally makes sense of what you are saying.
I see what you mean but I believe it can all go down the drain because you can wilfully elect to bring in all of your outside-of-UK income to the UK and pay tax for it?
I am based in the UK. My app business will be run from the UK. I would actually be in a difficult position to treat it as foreign sourced income. The fact that I claim that my app income won't be ECI for the US means it must be connected to somewhere else, and that somewhere else would be the UK?

As of today the majority of double tax treaties include this line "This term does not include any person who is liable to tax in that contracting state only if he derives income from sources therein"

If you think about it one second and ask "why would they include that line?"

The only answer that comes to mind is that they want to prevent to be considered resident for double tax treaty purpose any person that is taxed only on local source income.
Makes sense, but they'd have to prove that I haven't remitted that income to the UK (and paid tax on it) before making me pay tax in the US, don't you think?
 
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marzio

Entrepreneur
I see what you mean but I believe it can all go down the drain because you can wilfully elect to bring in all of your outside-of-UK income to the UK and pay tax for it?
I am based in the UK. My app business will be run from the UK. I would actually be in a difficult position to treat it as foreign sourced income. The fact that I claim that my app income won't be ECI for the US means it must be connected to somewhere else, and that somewhere else would be the UK?

Correct but you will lose all the non-dom benefits by doing so and by managing the US LLC from UK you are making it tax resident in UK liable to UK CIT at 19% (soon to be 25%) so this defies entirely the benefit of using a US LLC.

Makes sense, but they'd have to prove that I haven't remitted that income to the UK (and paid tax on it) before making me pay tax in the US, don't you think?

From what i know all the countries that have a double tax treaty with US and have a limitation on benefits article verify proactively that what you claimed is true and report back to US.
 

Asterion

New member
Back to the W8BEN, @marzio how can I differentiate the fact that I should have 0% witholding on the Apple revenue but probably something on the Android revenue? Do I submit a form for each source of income?
 

marzio

Entrepreneur
If the monetization strategy of your app will be only in-app purchases you still need to complete the payments info because they have bundled together all the possible ways you could earn money from the platform.

They ask all the infos beforehand so that if in the future you decide to add AdSense income to your app they already know the withholding tax reate to apply in your case.
 
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