Paragraph 2 contains an exception to the general rule of paragraph 1 that residence under internal law also determines residence under the Convention. (i) any person, other than a corporation, resident in the United Kingdom for the purposes of United Kingdom tax; but in the case of a partnership, estate, or trust, only to the extent that the income derived by such partnership, estate, or trust is subject to United Kingdom tax as the income of a resident, either in its hands or in the hands of its partners or beneficiaries; and

If he cannot be a dual tax resident under the treaty, he cannot cease to be a dual resident under the tax treaty. Read more, Private Clients Although this rule applies to both Contracting States, only the United States taxes its non-resident citizens in the same manner as its residents. Sorry, your blog cannot share posts by email. An individual who is a United States citizen or an alien admitted to the United States for permanent residence (a “green card” holder) is a resident of the United States only if the individual has a substantial presence, permanent home or habitual abode in the United States and if that individual is not a resident of a State other than the United Kingdom for the purposes of a double taxation convention between that State and the United Kingdom, https://www.treasury.gov/resource-center/tax-policy/treaties/documents/uktreaty.pdf. The term ‘‘resident of a Contracting State’’ does not include any person that is liable to tax in that country only on income from sources in that country or on profits attributable to a permanent establishment in that country. There are exceptions to this requirement for certain types of income that are outlined in Publication 519, U.S. Tax Guide for Aliens, under the section on Reporting Treaty Benefits Claimed. This results in a situation where the Green Card holder is a U.S. tax resident under the U.S. Internal Revenue Code, but NOT a U.S. tax resident under the treaty. Under paragraph 1, a person is considered a resident of a Contracting State for purposes of the Convention if he is liable to tax in that Contracting State by reason of citizenship. However, many tax treaties have an exception to the saving clause… https://www.jct.gov/publications.html?func=startdown&id=1693, (Note that the JCT fails to acknowledge that this is a change from the previous treaty provision. The Saving Clause basically says the contacting states (U.K. and U.S.) can disregard the treaty, when applicable, and still tax the resident/citizen as if the treaty was not in place. Post was not sent - check your email addresses! If the individual wishes to use the Section 911 Foreign Earned Income Exclusion is it suggested that: Saving Clause (Limitation)