A UK based client has sold a property in Portugal at a gain after 3 years of ownership and wants to know whether he pays capital gains tax in the UK or in Portugal? Is there a choice and if so which is the more favourable tax regime?
Marie Granby
Maxwell Hodge
Potentially he may have to pay tax in both.
Assuming that he is UK tax resident and domiciled then Portugal will have the primary taxing rights and, if it has not already been done, then local advice should be taken as the computation of the gain arising and associated tax consequences may well be different to the UK. Then the gain should also be computed in accordance with UK tax law and, subject to the amounts involved and his own particular circumstances e.g. other gains or losses in the year; reported to HMRC on his UK self-assessment tax return. To the extent that he has paid any Portuguese CGT he may be able offset this against any UK CGT arising.
Maxine Higgins
Citroen Wells