Is it possible to transfer shares to a UK broker, from a broker outside the UK (but within EU) ?
Hi UKPF!
I've read a lot and I've learned a lot from the sub, it's really great to see it grow!
This is probably more of a taxation/finance law question, rather than an investment one, pretty much what the title says: Is it possible to transfer shares from an EU portfolio held at an EU broker to a UK broker (share dealing account).
More detail: Investments wise (in the UK) I currently have, 1x ISA, and 2x high interest current accounts. As such up until now, I haven't used up any of my Capital gains allowance.
Outside the UK I hold ~10k treasury bonds (payed for by my mother as I grew up) and about ~5k worth of shares which I bought from teen savings (summer jobs) and I held long (~12 yrs).
Assuming trans-national transfer is possible. Looking at UK share dealing accounts even if I payed typical ~1% fx exchange comissions. It would still be a better position than selling them at the original broker, where I have no capital gains allowance (Portugal) and would be taxed at 20% on profit + broker fees on trasaction.
Is a transnational [title/certificate/portfolio/shares] transfer possible?
Has anyone had any experience doing something similar?
Posted Sep 25, 2016, 11:55 AM UTC
Technically, yes, but it will depend on your local broker.
You will either need to obtain the shares in certificated form and send them to a new broker along with a CREST transfer form - CREST is the UK's central securities depositary.
Or, you can become a sponsored CREST member through your local broker, which will allow you to hold shares electronically in your own name (i.e. you appear on the register).
Once you have direct ownership of the shares, rather than in nominee form through your broker, you can transfer them where you want.
Your tax position does not depend on which broker you use, it depends on your tax residency. If you are Portuguese tax resident you will still be liable to Portuguese tax on your worldwide income/gains.
Yes, I forgot to mention a blantantly important detail.
I am a Portuguese national and a UK resident for several years now.
When I first moved to the UK, I closed all of my fiscal activity in Portugal (self-employed contractor), and I changed my official address with the Portuguese government to my UK address.
I have an NI number, I pay my taxes in the UK (PAYE); effectively all of my taxes are domicialiated in the UK.
In my case if I am to sell those shares I am liable to pay capital gains on them in the UK (which would be waivered within my Capital Gains allowance), but I would also be 'double' taxed in Portugal at 20% as well.
Building on your comment, If I understood correctly, could I still sell those shares at the original brooker, and afterwards request some kind of 'double taxation' refund from the Portuguese Government, on the 20% capital gains tax?
The taxes themselves won't be domiciled, it's just the amounts payable and to which tax authority will be due will depend on:
The general rule is that wherever you are tax-resident, you will pay to that tax authority tax on your worldwide income and gains (there are a few exceptions though!), and you pay tax to the authority wherever taxable activity arises under their laws.
There are then potentially credits against any foreign tax paid, from the point of view of any taxing state.
So in your case, if you sell the shares in Portugal, then you would be:
If you did pay any Portuguese tax, you would then check if there's any double tax treaty between Portugal and the UK, to see if you can:
Usually though, the credits can't give you a refund, so if you're already paying 0 tax in the UK, that's as far as it will go!
I see, makes sense. I assumed with regards to double taxation that we were able to flag who should apply tax (either one country or the other) not as an agreement based on the total amount of tax applied by both countries (as in the tax credit scenario).
You also raised another good point, I assumed that I am liable to pay capital gains tax in Portugal if I sell these shares. However I should definitely confirm that this is still the case for myself as a non-resident.
Thank you for walking me through this, I will definitely need to read up further!
Assumptions are expensive when it comes to multijurisdictional tax!
I think that tax authorities would be unhappy if tax was paid on a more optional basis, haha!
When happens mainly is that each tax authority charges you the full amount of tax due under their laws, and then concludes bilateral treaties to try and reduce (but not outright prevent) double taxation - but it does still exist (and sometimes the treaties only reduce the effective rate, not eliminate it).
People can be dual or even multiple tax resident, and citizens of the US and Eritrea are taxed based on their citizenship not their residence.
The issue is whether any gains on UK shares you hold with your Portuguese broker are deemed to arise in Portugal - you should check on that with them (i.e. maybe they are actually held offshore, as the shares are probably held by nominees).
If they are deemed to be held in Portugal the tax rate is 28%, which means you need to check the provisions of the UK-Portugal double tax agreement: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/500344/uk-portugal-dta_-_in_force.pdf
According to Article 14:
it is likely you would only be taxed by the UK (at UK rates) - but you'd have to claim any relief from Portugal if they levy any tax on you or require declarations.