Whether you are an individual, limited company or an organisation in the UK and earning income from overseas, you may claim tax relief or exemption with a certificate of fiscal residence. The tax authorities of some countries require this certificate from you to confirm your residency status of the UK.
This certificate is required to avoid being taxed twice on foreign income. Let’s dive into what is a certificate of fiscal residence, what information does HMRC need and how can you apply for it to get the certificate. Read on to explore all!
Certificate of Fiscal Residence: How to Apply?
If you are a UK taxpayer and earn income from overseas, you are required to abide by the tax laws of both countries. As a result, you may be double-taxed on your foreign income. The UK has signed several tax treaties with other countries to prevent the double-tax levied on the same income of the UK’s taxpayer in the UK and another contracting state.
To claim relief or exemption, the UK’s taxpayers need to provide proof to the foreign tax authorities that he is a UK’s taxpayer. For this reason, a certificate of residence (COR) is needed. This certificate confirms that the person is a tax resident of the UK for a specific period.
You can apply for a certificate of residence if:
- you’re a UK resident
- there’s a double taxation agreement with the relevant country
In case, you have paid the tax to the relevant country, you may get a refund. The overseas country’s tax authority that deals with your claim will ask HMRC to acknowledge that you’re a UK tax resident (in line with the double taxation agreement).
Bear in mind that HMRC will not send this certificate if you don’t qualify for the treaty benefits under a double taxation agreement. Additionally, the foreign body will decide whether you’re eligible to get relief for foreign taxes.
Information That HMRC Needs
Whilst applying for the certificate, you are required to provide the following information to HMRC:
- the reason for getting the certificate of residence
- on which double taxation agreement do you want to make a claim
- Your income type on which you want to claim relief along with the relevant income article
- For what period do you require the certificate (in case the issue date is different)
- If you need it by the double taxation agreement, you need to confirm that you’re the sole owner of the income you need a claim for and you’re liable to pay UK tax on all the income you are making a claim
If you need a certificate of residence for the period on or after 6th April 2013 and you haven’t filed a Self Assessment tax return for the period yet, then you are required to inform HMRC:
- the date you arrived or departure in the UK
- the days you have lived in the UK during the tax year you need the Certificate
- if you’ve lived for less than 183 days in the UK during the tax year you need the certificate for, then why do you think you’re resident under the Statutory Residence Test
- if you came or left the UK during the tax year you need a certificate, the date you started or ceased to be resident (According to the rules of SRT split year)
The companies who’ve just incorporated (new) and have not filed a Corporation Tax Self Assessment return need to provide HMRC with the:
- name and address of each shareholder and director
- Proofs that it’s classed as the UK resident
How to Apply for the CoR?
To apply for the certificate of fiscal residence:
- you may use the online service of the HMRC
- email a form using the online account
- if you’re an agent applying on the client’s behalf, you may apply online
To avail of online services, you need to have a Government Gateway user ID and password. In case, the relevant country asks you to clarify your residence, send it to:
Pay As You Earn and Self Assessment
HM Revenue and Customs
So that’s all about certificate of fiscal residence to get double tax relief or treaty relief from the relevant country in respect to the particular income or gains. In case, you are a limited company, partnership or a Limited Liability Partnership (LLP), you need to use form RES1, and send it to the Customer Compliance Manager, or a nominated person to get the CoR.
Disclaimer: This blog is just for the basic information on the topic.