Investing in offshore funds

[leosayer]

There seem to be plenty of offshore funds, in particular hedge funds that generate good returns for investors.

Aside from the investment risk what are the implications if I buy one of these and sell a few years down the line?

I understand that I will have to pay income tax on all dividends and profits when I bring the money back to the UK - is that it?

[deva link]

leosayer said:

I understand that I will have to pay income tax on all dividends and profits when I bring the money back to the UK - is that it?

You're supposed to pay any tax due tax straightaway. You might only get caught when you bring the money into the UK.

[Eric Mc]

If you are a UK resident, ANY income earned in ANY part of the world is subject to UK tax whether you bring it into the UK or not.

Most European countries have now signed up to a new disclosure requirement so they will notify the tax authorities if you don't.

[jaybee]

Correct me if I'm wrong, but if there's a double tax treaty in place and you've paid local taxes you then don't pay again in the UK.

[deva link]

jaybee said:

Correct me if I'm wrong, but if there's a double tax treaty in place and you've paid local taxes you then don't pay again in the UK.

I don't think it's the original posters intention to be paying local taxes

[Eric Mc]

Only if they exceed the local ones.

[jaybee]

I was referring to "Most European countries have now signed up to a new disclosure requirement so they will notify the tax authorities if you don't". Most European countries have a double tax treaty.

Off Topic, I hear Belize is a nice place to holiday.

[Eric Mc]

That isn't the point.

Many European countries were looked on as tax havens - in that they deducted NO tax at source on investments by oversees investors. Whether there is a DTA in place is irrelevant as it was up to the tax payer to declare their overseas income on the tax return of the country they were resident in. Many people were obviously ignoring this legal requirement. That meant that they were paying no tax at all on their foreign investments.

Under these new rules, tax haven countries are now obliged to report the names and addresses of those "foreigners" who have accounts in these "tax haven" states (Switzerland, Isle of Man, Channel Islands etc). In a few years time they will also start deducting tax at source on these "tax free" investments and the only way to get the tax back will be to report the income to your own tax authorities. At this point, the DTA will kick in and you will be given credit for the tax already suffered and be may pay any tax balances due or receive a tax refund, whichever is appropriate in your own circumstances.