Overview

Real estate income is generally taxed where the property is located; the UK’s network of tax treaties generally allow the jurisdiction where the land is located to tax income from the land.

Therefore, a UK company with overseas property may be subject to tax in the foreign jurisdiction as well as in the UK, as UK tax rules subject a UK company to UK corporation tax on its worldwide profits including from foreign land and property. Relief for overseas tax on property income may be available by treaty relief, unilateral relief or deduction relief, depending on the circumstances.

There is, unfortunately, no substitute for checking the tax treaty to see if one country has unilateral taxing rights, or otherwise how its provisions may affect double tax relief. The relevant provisions to check will depend on the nature of the income, such as rental or trading.

Basis of taxation of foreign property income

Where the business of the UK company is such that the income from property is taxed as trading income rather than