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Double taxation

  • 12-04-2012 2:50am
    #1
    The Irish Riddler
    Registered Users, Registered Users 2 Posts: 221 ✭✭


    I was reading in the paper today (shareholders enraged ect ect) that Barclays will pay their chairmans income tax on top of existing salary and bonuses because he is a US citizen working in the UK and both governments tax his income with no regard for tax paid to the other.

    How can this be?


Comments

  • #2
    srsly78
    Registered Users, Registered Users 2 Posts: 7,157 ✭✭✭srsly78


    American citizens always have to file a tax return, even if not resident in america. This is why many fatcats americans renounce their citizenship.


  • #3
    beeftotheheels
    Registered Users, Registered Users 2 Posts: 1,675 ✭✭✭beeftotheheels


    The Irish Riddler wrote: »
    I was reading in the paper today (shareholders enraged ect ect) that Barclays will pay their chairmans income tax on top of existing salary and bonuses because he is a US citizen working in the UK and both governments tax his income with no regard for tax paid to the other.

    How can this be?

    A gross up clause. US citizens are taxable on their world wide income in the US whereas the UK taxes residents.

    Bob Diamond (Barclays CEO, their chairman is British so I'm assuming you're talking about the CEO) is a US national who used to work for Barclays Capital in the US.

    His employment contract probably states that if Barclays required him to become UK tax resident (as they did when he took over the CEO's job) then they will pay the tax liability which that requirement created.

    Pretty standard practice for expats.


  • #4
    beeftotheheels
    Registered Users, Registered Users 2 Posts: 1,675 ✭✭✭beeftotheheels


    Re-read the original post regarding no credit being given.

    The US and UK have a double tax treaty but have a history of not blinking first. The Nat West branch capital attribution and GSK transfer pricing cases would be the two biggest and most note worthy and both evidence an abject failure of the two tax authorities (to a puritan the US was the one in the wrong in both cases) to come to mutual agreement. As a result one couldn't assume that the mutual agreement procedure in the treaty would apply i.e. it would be unfair to him to assume that double tax relief would be available in the face of the IRS actually trying to ignore the treaty.

    This will be compounded by his share plan because the UK will seek to tax as income something which could be treated as a capital gain in the US which could cause difficulty for him - you generally can't offset one kind of tax (income) against another type of liability (capital gains).


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