German British tax agreement

[DorothyL]

If I sell a house in Germany, but am a UK resident - do I have to pay capital gains tax in the UK?

According to the tax treaty (which you can find on gov.uk - Google "Germany UK double tax treaty") - article 13 suggests that sale of a property in Germany may be taxed by Germany. That does not mean that the UK cannot also tax it. But you should get relief for any tax already paid on Germany. Whether you are taxable in the UK will depend on your tax status in the UK. A UK tax resident pays tax on foreign capital gains but a non resident only pays on capital gains arising on UK property.

Thank you, that's very helpful. How can I find out if the UK will demand tax as well?

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If you are UK domiciled and UK resident you will be taxed in the UK (but will be able to offset German tax paid as the previous poster says).

If you are not domiciled in the UK then you can claim the remittance basis and shield the gain from UK tax. This has a £30k charge if you have been resident for seven years or more and a greater charge if you've been resident for more than 12 years. Whether this is worth claiming will depend on a number of factors including the quantum of the gain, the tax paid in Germany and whether you want to remit the sales proceeds to the UK.

Thanks Badgerface. Are you familiar with the treaty?

Fairly although not an expert in that particular treaty. Most countries where a property is located will have primary taxing rights under modern treaties and the UK always taxes worldwide income and gains for UK residents, unless they can claim the remittance basis.

The gain on the property might differ in the different countries which you need to look out for. I would suggest you speak to a tax advisor to make sure you get your filing obligations correct. What sort of capitalgain do you think you have?

Quite a lot - a few hundred thousand

So in the treaty it says -

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.

That sounds like tax will be paid in Germany, not in the UK...Can you point me to where I can find the evidence that the UZk will charge tax? ( sorry to be a pain!)

It comes back to your domicile status as mentioned above. If you are UK resident and UK domiciled then you are taxable on your worldwide income and gains in any given tax year, so the gain needs to be declared on your UK tax return with relief given for any tax paid in Germany. The treaty just gives Germany primary taxing rights, it doesn't say the UK doesn't tax the gains.

If you are not domiciled in the UK then you potentially have other options but you need to take specialist tax advice.