Double Taxation Agreement Uk Liechtenstein

Double Taxation Agreement UK Liechtenstein: A Comprehensive Guide

Double Taxation Agreement (DTA) is an agreement between two countries to avoid the situation where an individual or business is taxed twice on the same income. DTA specifies the rules that determine which country has the right to collect tax on different types of income. The agreement also establishes the method of eliminating double taxation and provides mutual administrative assistance between the parties.

DTA UK Liechtenstein was signed on 11 August 2009, and it came into force on 27 December 2010. This article provides a comprehensive guide on what DTA UK Liechtenstein entails.

Jurisdiction of Taxation

Under DTA UK Liechtenstein, an individual or business is subject to taxation according to the jurisdiction of taxation. The jurisdiction of taxation refers to the country where an individual or business is taxed on its income. For instance, if a resident of the UK earns income from Liechtenstein, the UK will have the right to tax that income. Similarly, if a resident of Liechtenstein earns income from the UK, Liechtenstein will have the right to tax that income.

Eliminating Double Taxation

DTA UK Liechtenstein provides three methods of eliminating double taxation. These include the exemption method, the credit method, and the deduction method.

1. The exemption method allows an individual or business to be taxed in one country only. For instance, if a resident of the UK earns income from Liechtenstein, the UK can exempt that income from taxation as long as the income is taxed in Liechtenstein.

2. The credit method allows an individual or business to receive a tax credit for the taxes paid in one country against the taxes owed in the other country. For instance, if a resident of the UK earns income from Liechtenstein and pays tax in Liechtenstein, the UK will give a tax credit for the tax paid in Liechtenstein.

3. The deduction method allows an individual or business to deduct the taxes paid in one country from the income earned in the other country. For instance, if a resident of the UK earns income from Liechtenstein and pays tax in Liechtenstein, the UK will allow a deduction for the tax paid in Liechtenstein from the income earned in Liechtenstein.

Administrative Assistance

DTA UK Liechtenstein provides for mutual administrative assistance in the collection of taxes. This means that the tax authorities in the UK and Liechtenstein can exchange information to ensure that the correct amount of tax is paid by individuals or businesses under the agreement.

Conclusion

DTA UK Liechtenstein is important in preventing the situation where an individual or business is taxed twice on the same income. The agreement specifies the rules for taxation, eliminates double taxation, and provides for mutual administrative assistance between the UK and Liechtenstein tax authorities. As such, individuals and businesses should take advantage of this agreement to ensure they do not pay double tax.

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