Tax Treaty Case Law around the Globe 2013

1. S. 67 Introduction

This is a decision of the First Tier Tribunal in the United Kingdom. The case has not proceeded any higher so far. There were two main issues in the case. The first question was whether the taxpayer, Mrs Yates, was resident for domestic tax purposes in the UK. On the basis that she was, and that she had dual residence, the second question was the application of the tie-breaker under the UK-Spain DTC of 1975.

2. Facts of the Case

The facts are fairly straightforward. Mrs Yates realized certain capital gains on the sale of shares over a number of years (from 2003 to 2006). She sought to argue that she was not liable to UK tax on the basis that: first, she was not resident in the UK under domestic law, and second, if she was, she was also resident in Spain and the tie-breaker fell to Spain, and Spain had the exclusive right to tax. There wasn’t any evidence as to whether Spain would actually tax the gains, but she said that the tie-breaker would have had the result that only Spain could tax.

She originated in the UK. She had been born in the UK and all her background was there, but she had a disease called Gauchers disease which is described in the case as a wasting illn...