mutantpoodle wrote:I have esablished and agreed Capital losses here in UK, which I am carrying forwards for when I make a taxable capital gain I will be able to offset some or all
meanwhle I am selling an apartment in Portugal which will give a taxable 'capital gain' over there which is taxable in Portugal
I realise that I do not pay CGT twice and whatever I pay there will reduce my tax liability in the sale here
but...
does anyone know if I can use my UK 'losses brought forward' against my Portuguese CGT??
will of course try and do so....but I wondered if anyone has actual experience...positive or negative
No actual experience, but on general principles: suppose the UK transactions on which you realised capital losses had gone better for you and produced capital gains instead. Would they have been subject to Portuguese CGT? - i.e. would you have been supposed to report the UK transactions to the Portuguese tax authorities?
If you would have been supposed to report the UK transactions to the Portuguese tax authorities, the answer
might be that yes, those transactions and the gains (or losses as it actually turned out) would be recognised by the Portuguese tax system. But the way to report the transactions and get the gain or loss recognised for Portuguese CGT purposes would be via the Portuguese tax system - so if that's the case, do whatever you can within the Portuguese tax system to report the transactions and get the losses recognised in that system.
I suspect though that the answer is that you weren't supposed to report the UK transactions to the Portuguese tax authorities at all, i.e. that they're only interested in your Portuguese transactions. In that case, I think your chances are nil - you really cannot expect them to offset losses when they wouldn't have been able to tax the gains if the UK transactions had worked out more favourably. And personally, in those circumstances I wouldn't even
try, because of the risk that the Portuguese tax authorities would investigate whether I should be more of a Portuguese taxpayer than I was - even if the answer they ended up with was "no, everything's OK here", such an investigation would be likely to be a lot of hassle!
On the UK CGT side, by the way, the sale of the apartment is presumably producing a taxable gain in the UK CGT system as well as in the Portuguese tax system. As you say, CGT you pay in Portugal will reduce the CGT you pay in the UK, basically either by the amount of the Portuguese CGT if that is less, or to zero if the Portuguese CGT is more. But I believe the mechanism by which it does that is a tax
relief - i.e. you calculate what the UK tax would have been without taking the foreign tax into account, then use the foreign tax paid to reduce the amount of UK tax payable. The important point there is that offsetting losses is part of the calculation of what the UK tax would have been - so is done at a stage in the calculation before the Portuguese tax is taken into account. In particular, it seems possible to me that you'll be required to use some or all of your UK brought-forward losses even if the Portuguese CGT paid would end up reducing the UK CGT to zero anyway.
However, I should emphasise the words "I believe" and "It seems possible to me" in that. This is not an area that I understand at all well - I just know enough about it to know that it's a minefield I'll need to investigate it more thoroughly if I ever consider straying into it myself! So basically, take the preceding paragraph of this reply as just raising questions, not answering them!
Gengulphus