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  #21  
Old 21.07.2011, 00:38
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Re: Swiss Tax implications for transferring money to the UK

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Hi guys & gals
I'm currently debating on whether to take advantage of the cheap pound and send some money back to the UK.
Does anyone know of the tax implications of transferring around 50'000 CHF back to the UK ?
I'm a Swiss tax resident (still with a base in the UK) so wondered if I would still have to declare this money, even though it's in the UK, in my next Swiss tax return ? Also would I be liable for paying any taxes on it in the UK ?


The OP asked a fairly straight-forward question.

It has a straightforward answer.

Assuming no interest is earned, and you paid tax on the money when you originally earned it, there are no tax consequences for moving it from Switzerland to the UK.

If you've broken laws or evaded taxes by not declaring where you had an obligation, because you didn't understand your residency or domicile position, you've got problems. But the CHF50K you moved aren't what caused them.

Transfer the money, sleep easy. No need to file additional paperwork anywhere. For your income, properties, investments, etc -- contact a qualified tax advisor. But for the 50K, you're free and clear.
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  #22  
Old 21.07.2011, 00:41
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Where the account is has no bearing on tax liability , tax evasion is a criminal offence in the uk so it's rather more serious than in CH .
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  #23  
Old 21.07.2011, 00:41
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Re: Swiss Tax implications for transferring money to the UK

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It's fairly clear if you. rented your uk property when you left rather than sold , that your leaving was only temporary & you intended to return at some point . Escaping CGT is now very difficult as it required 'leaving' for at least 5 tax years not the previous 1.
This would be an issue if there were any capital gains to realise. But there is no capital gain in this case. Hence, no tax.
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  #24  
Old 21.07.2011, 00:42
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Re: Swiss Tax implications for transferring money to the UK

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Uk tax is self assessment it's upto the taxpayer to pay what is due without being asked.
Please describe the tax that has been evaded in this case? Which tax do you think is due that has not been declared/paid?
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  #25  
Old 21.07.2011, 00:47
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Re: Swiss Tax implications for transferring money to the UK

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How would the UK tax people know anything about it, as you are not required to declare your wealth or bank accounts in the UK??

Also I would open an offshore account in sterling to avoid withholding tax. Like http://www.lloydstsb-offshore.com/ if you are a UK non-resident...
This advice is mostly correct. But the tax that would be due in the UK is not because moved the money there. It is because you earned interest there.

Moving the money (regardless of where you move it) has no tax consequences. Earning interest has tax consequences, depending on where you earn it. If you earn interest in the UK, you owe taxes on the interest in the UK (and Switzerland as well). If you move the money offshore, you will only owe taxes on the interest in Switzerland. In both cases, you must declare the original 50K as part of your wealth on your Swiss tax return, and you must declare the interest in whichever country (or countries) has a right to that tax that interest.

From a simplicity perspective, the easiest thing to do would be finding a Swiss bank that offers a GBP-denominated account. You get the benefits of the exchange rate without the hassle of tax complications. And you sleep easy. And don't have to take contradictory advice off an internet bulletin board.
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  #26  
Old 21.07.2011, 00:52
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If the OP was in fact liable to UK tax on his world wide earnings he would be evading tax, he claims to still own a house in the uk so almost certainly has not 'left' the uk for tax.
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  #27  
Old 21.07.2011, 00:56
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Exchange rates in Swiss banks are not brilliant & zero interest rates usually to boot, accounts in the channel islands are better however opening accounts in a country you don't live in us a pain, just managed it in Malta after 10 weeks!
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  #28  
Old 21.07.2011, 08:05
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Re: Swiss Tax implications for transferring money to the UK

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If the OP was in fact liable to UK tax on his world wide earnings he would be evading tax, he claims to still own a house in the uk so almost certainly has not 'left' the uk for tax.
That may be. But as I already pointed out:

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If you've broken laws or evaded taxes by not declaring where you had an obligation, because you didn't understand your residency or domicile position, you've got problems. But the CHF50K you moved aren't what caused them.
If the OP has understood where he has tax liabilities properly and paid the appropriate taxes, moving the CHF50K has no tax consequences (as nothing has been earned -- so there should be neither income tax nor capital gains tax due). If the OP has misunderstood where he has tax liabilities on his income, he's got bigger problems because he hasn't paid the right tax on his earnings -- but they've got nothing to do with his transferring money.

Once again, in summary: move the money. If you are unsure of your overall tax position or where you should be paying tax, contact a qualified tax professional. From a Swiss perspective, the only tax implication is that you must continue to declare this CHF50k as part of your worldwide wealth as long as you are liable to Swiss tax.
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  #29  
Old 21.07.2011, 09:32
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Re: Swiss Tax implications for transferring money to the UK

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If the OP was in fact liable to UK tax on his world wide earnings he would be evading tax, he claims to still own a house in the uk so almost certainly has not 'left' the uk for tax.
To lose your UK tax domicile you need to declare that you are leaving the UK indefinitely. The OP can read the "foreign" pages of the UK tax return and look at what they were classified as the year prior. I left the UK after being ordinarily resident + domiciled (after a good 4 years of being resident, non-domiciled) and became non-domiciled as soon as I moved here and declared I was here for good. The property I kept in the UK wasn't an issue and a sale in 2005 meant no CGT, since i'm still domiciled here.

If the OP wants a sterling account as others have said the offshore channel islands / isle of man offer sterling accounts where as a non-UK resident, interest earned does not need to be declared on UK tax returns. You will of course need to enter it on your CH tax declaration.

I wouldn't recommend a CH sterling account since they pay rubbish interest.
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  #30  
Old 21.07.2011, 09:34
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The issue is many people will not have realised they have broken the law, 2 years ago their accountant could have told them they had zero uk liability, now they may owe tax going back 20 years with interest.

This will get very nasty for people who get caught up in this.
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  #31  
Old 21.07.2011, 09:39
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You don't loose your domicile of origin that easily , you still have a uk passport, leaving for 4 years does not do it.

If you have sold your uk property & any other assets, then your probably free from the uk revenue except for Inheritance tax .
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  #32  
Old 21.07.2011, 09:46
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Re: Swiss Tax implications for transferring money to the UK

Would a Brit. who has been neither resident nor domiciled in the UK for over 30 years, but who owns a property in the Uk for their personal use, which produces no income, and on which Swiss tax is paid, possibly be liable for additional Uk tax?
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  #33  
Old 21.07.2011, 11:03
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Yes having a property available to use would now be interpreted as you never left, you should speak to a tax lawyer in the uk, selling the property ASAP would be a good start .

I cursed my lawyers advice to sell rather than rent London flat in 1994 as I lost out in 5 times capital growth, however the tax liability today would take that profit.
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  #34  
Old 21.07.2011, 11:07
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Holding that property would prevent you ever loosing your uk domicile of origin, you were retaining a place to come back to. That part of the law never changed, my lawyer wanted me to attempt to loose my domicile of origin, back in 1994
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  #35  
Old 21.07.2011, 11:16
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Renting out the flat for last 30 years would have been better as it complied with the guidelines at the time, a lot depends on your other connections to the uk , & how regular your trips to the uk have been.

You have to show you have Brocken ties with your old life in the uk.
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  #36  
Old 21.07.2011, 11:19
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Re: Swiss Tax implications for transferring money to the UK

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Would a Brit. who has been neither resident nor domiciled in the UK for over 30 years, but who owns a property in the Uk for their personal use, which produces no income, and on which Swiss tax is paid, possibly be liable for additional Uk tax?
The only potential UK taxes would be capital gains tax on any profit on sale, assuming it is not your prime and sole residence. And death duties in the event of the owner dying...
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  #37  
Old 21.07.2011, 11:44
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Unfortunately that's no longer true, it used to be considered so however the revenue won a landmark case 18 months ago

The possibility of having to be assessed for uk taxes going back 30 years, personally I would sell the flat ASAP & not return to the uk even for a single day for 5 years & cross my fingers

Historically you would not have been liable to CGT on the sale as you were non resident.

The danger is income tax on world wide earnings for 30 years, I am not sure on the CGT implications,

Last edited by fatmanfilms; 21.07.2011 at 11:55.
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  #38  
Old 21.07.2011, 12:01
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Re: Swiss Tax implications for transferring money to the UK

There’s been a lot of misinformation spread here by people who have ‘heard’ things about international taxation but clearly don’t understand the rules. Taking professional tax advice, or at the very least, taking tax guidance from guides/books written by professionals is a much better approach than relying on hearsay on an internet forum.
Download the Guide to Expat Taxation as a starting point.

A few relevant highlights:

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One of the biggest problems people can have when they decide to move abroad is that although they think they have left the UK, they will actually remain UK resident under the UK domestic tax rules.

There is no statutory definition of ‘residence’ in the UK, and the rules have been developed over many years and court cases. Residence is a matter of physical presence in a country, either in terms of time spent there, or the quality of the time spent there, and the quality of your connections with that country, in some cases.
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The quality of your connections with the UK still count – an individual whose family all live in the UK but who works abroad and commutes back to the UK on some weekends could still well be UK resident. The same could apply if you retain accommodation for your use in the UK, where your family are based, and your business and social connections are. So day counting in itself is not always an accurate guide as to where you are resident.

What will your position be if you retain a property in the UK? Could it be argued that your property overseas is much more of a holiday home rather than a permanent home base?
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Even where you satisfy the domestic residence criteria of the overseas country, as well as the UK domestic rules, it is usual that under the terms of a Double Tax Treaty you can only be resident in either country at any one time, and so the Treaty has ‘tie-breaker’ rules to establish where you are resident. It might be dangerous to rely on the tie-breaker
rules, as circumstances can change, often from year to year – sometimes all it could take is a bout of serious illness and your residence position could change, and you haven’t taken advice or prepared for it. Also, your interpretation of the rules might not be the same as those of the tax authorities in the country in which you are claiming not to be resident.
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The UK has the largest network of tax treaties, covering over 100 countries. These are designed to protect against the risk of an individual or a corporate entity being taxed twice where the same income is taxable in two states. However, not all income or gains are taxed in both countries. The problem is, if you don’t know the rules, you can end up paying more tax than you need to do if you are paying it in the wrong country.

Also, where income or gains are taxed in both countries, although you can usually offset the tax paid in, say, the UK against the tax due overseas, if the tax payable in the UK is higher you will not get a refund of the difference in the overseas country. So ideally, if you can avoid paying the higher UK rate altogether, you can reduce your tax bill this way.

However, just not paying the UK tax is not an option, so you need to take advice to make all of your income as tax efficient as possible.
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Many people retain UK property to ‘let’ out when they leave the UK. For some, this is their ‘pension’ fund and they may have one or more buy-to-let properties; others are unable to sell their UK main home when they leave the UK, and so decide to let it out to provide an income.

What about your rental income?

This income remains taxable in the UK, and must be reported there each year. The income may also be taxable in your new country of residence, although usually the UK tax paid on this income can be offset against the overseas tax on the same income. You could also be liable to UK capital gains tax when you sell a UK property unless you sell it during a complete UK tax year of non-UK residence and you remain non UK resident for 5 complete and consecutive UK tax years.
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  #39  
Old 21.07.2011, 12:58
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Re: Swiss Tax implications for transferring money to the UK

Many thanks to you all for the posts and advice.
Sorry I know it's a simple question that can be complicated to answer depending on all the variables involved.
So it seems clear to me that transferring the money back to the UK shouldn't be an issue as long as I continue to respect the relevant tax rules i.e. still declare the money as wealth 'Vermogen' on my Swiss tax return and make sure that any interest earned is declared both in the UK & Switzerland as well.
I think though maybe opening an offshore account might be a good move - then I keep my tax liabilities just to Switzerland.
Thanks again
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Old 21.07.2011, 13:54
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If your not liable for uk taxes there is nothing to declare , if you are then it's everything that needs to be declaired.
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