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Old 10.10.2019, 07:53
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How does it work with taxes already paid in UK?

I am wondering if anyone could share their similar experience or could describe what, potentially, happens next.

I am currently in communication with the Zurich tax office over tax returns for 2017. Liquidation of my UK private limited company concluded that year and taxes were already paid for disbursements from the said liquidation. And so, in my Swiss tax returns, there is a marked increase in bank balances.

The Zurich tax office is presenting me with a computation that shows a substantial jump in my taxable income. My tax bracket has moved up as well.

While I can understand that the tax band has moved up (all incomes considered - liquidation proceeds are considered as dividends as I am told), I was taken aback when I see my Swiss tax bill increasing dramatically too. It seems like I am being taxed twice at the full extent on the same transaction.

In similar situations where taxes are already paid abroad, how do things things with Swiss taxes usually pan out?

- Do you have to pay the quoted Swiss tax first, avoid penalties for late payment and get a refund?

- Do you work it out with the Swiss tax office first and at some point later pay the eventual netted amount?

Thanks in advance.
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Old 10.10.2019, 15:52
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Re: How does it work with taxes already paid in UK?

If you want to object the Swiss tax assessment (Veranlagungsverfügung) you must do as instructed on the assessment and within the stated time limit. Otherwise it becomes legally binding w/o any further possibility to object.

You will have to object against the federal tax and the canton/commune tax assessments separately.

AFAIK provisional bills are provisional. Paying them does not mean you accept them. Only a final bill (Schlussrechnung) would be binding. Also, in canton Zurich you must pay the provisional bill for the federal tax (exact amount). The provisional bill for the canton/commune tax is more like a suggestion.

There is a double taxation treaty CH-UK
https://www.admin.ch/opc/de/classifi...291/index.html
https://www.gov.uk/government/public...d-tax-treaties

PS: Form what you said it looks like in the UK the company was taxed, whereas in CH you as a private individual is taxed. Be aware that the Swiss tax law has some tax reliefs in case dividend is paid by company where you have a certain ownership.
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Old 10.10.2019, 17:38
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Re: How does it work with taxes already paid in UK?

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PS: Form what you said it looks like in the UK the company was taxed, whereas in CH you as a private individual is taxed. Be aware that the Swiss tax law has some tax reliefs in case dividend is paid by company where you have a certain ownership.
As I understand it, this not the case, the company was liquidated and the OP received a distribution which he paid UK taxes on.

OP, as I understand it from your post, the liability rests on the interoperation of how the final distributions from your company are considered - a capital distribution or an income distribution. You probably need to speak to a tax consultant and have him prepare a submission for you. There are many aspects that need to be covered:
- The valuation of the share capital on liquidation: Swiss method should produce a much higher valuation, thus increasing the capital distribution and reducing the income distribution
- The timing of the distributions: before, during or at the end of the liquidation
- The way they were handled by the UK authorities
- etc...
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Old 12.10.2019, 09:28
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Re: How does it work with taxes already paid in UK?

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If you want to object the Swiss tax assessment (Veranlagungsverfügung) you must do as instructed on the assessment and within the stated time limit. Otherwise it becomes legally binding w/o any further possibility to object.

You will have to object against the federal tax and the canton/commune tax assessments separately.

AFAIK provisional bills are provisional. Paying them does not mean you accept them. Only a final bill (Schlussrechnung) would be binding. Also, in canton Zurich you must pay the provisional bill for the federal tax (exact amount). The provisional bill for the canton/commune tax is more like a suggestion.

There is a double taxation treaty CH-UK
https://www.admin.ch/opc/de/classifi...291/index.html
https://www.gov.uk/government/public...d-tax-treaties

PS: Form what you said it looks like in the UK the company was taxed, whereas in CH you as a private individual is taxed. Be aware that the Swiss tax law has some tax reliefs in case dividend is paid by company where you have a certain ownership.
If I already have a conversation underway and not yet resolved, does the deadline still apply?

I am surprised that I need to take this up with both the federal tax and the canton/commune tax authorities. In the letter sent to me, any appeal is to be submitted to the cantonal tax office. I will write them to confirm this, nonetheless. Thanks for pointing it out as I do not want to be caught out.

There are no invoices received as yet, just the computation schedules. This was sent to me by the cantonal tax office but includes federal tax computations(?)... this is confusing indeed.
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Old 12.10.2019, 09:34
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Re: How does it work with taxes already paid in UK?

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As I understand it, this not the case, the company was liquidated and the OP received a distribution which he paid UK taxes on.

OP, as I understand it from your post, the liability rests on the interoperation of how the final distributions from your company are considered - a capital distribution or an income distribution. You probably need to speak to a tax consultant and have him prepare a submission for you. There are many aspects that need to be covered:
- The valuation of the share capital on liquidation: Swiss method should produce a much higher valuation, thus increasing the capital distribution and reducing the income distribution
- The timing of the distributions: before, during or at the end of the liquidation
- The way they were handled by the UK authorities
- etc...
That is correct. I am not referring to corporate taxes but personal ones. Corporate taxes were paid much earlier, prior to liquidation of the company.

I have not seen anywhere to suggest that the Zurich tax office is attempting to value the company. So far, everything is taken at book value (it is a private limited company after all).

FYI, the independent liquidator distributed the liquidation proceeds after the liquidation was completed.

What is critical for me is that I am not paying twice the amount of taxes on this. The amount I paid to the HMRC, appears to me, to exceed the amount quoted by the Zurich tax office. Taking a simplistic view on the tax treaty, I should not pay any more than I already did to the HMRC.
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Old 13.10.2019, 20:35
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Re: How does it work with taxes already paid in UK?

Seems like you were already tax-resident in Switzerland when you closed the company. If so and you weren't also UK tax-resident then you probably shouldn't have paid taxes in the UK.
As for the other stuff, usually writing to the tax people and explaining the situation will make them recalculate.
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Old 14.10.2019, 01:55
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Re: How does it work with taxes already paid in UK?

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That is correct. I am not referring to corporate taxes but personal ones. Corporate taxes were paid much earlier, prior to liquidation of the company.

I have not seen anywhere to suggest that the Zurich tax office is attempting to value the company. So far, everything is taken at book value (it is a private limited company after all).

FYI, the independent liquidator distributed the liquidation proceeds after the liquidation was completed.

What is critical for me is that I am not paying twice the amount of taxes on this. The amount I paid to the HMRC, appears to me, to exceed the amount quoted by the Zurich tax office. Taking a simplistic view on the tax treaty, I should not pay any more than I already did to the HMRC.
As I said you really need to talk to a tax advisor and with such limited information all I can do is guess... I expect the Swiss authorities are using the nominal value of the shares and assuming everything else distributed by the liquidator is income, which it is not. One approach would be to value the shares according to Swiss tax rules which would be several magnitudes great and use that value to demonstrate that the liquidation distribution could be nothing other than capital and not subject to Swiss income tax.

I’ve used these guys in the past for this kind of thing: taxexpert.ch. But the partner I knew has retired and I’m no longer in the business either.
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