How companies and other concerns including partnerships, pension schemes and trusts, can claim Double Taxation Relief. Types of income covered by double taxation treaties.
If a company has income from a source in one country and is resident in another, it may be liable to pay tax in both countries. To avoid double taxation in this situation, the UK has negotiated treaties with more than 100 countries.
Companies resident in a country with which the UK has a double taxation treaty may be able to claim exemption or partial relief from UK withholding tax on certain types of UK income. The conditions of exemption or relief can be found in the relevant double taxation treaty.
References to companies throughout this guidance also apply to partnerships, pension schemes and trusts.
Interest, royalties, pensions and purchased annuities
A company may be able to apply for relief from UK withholding tax if it’s resident in a double taxation treaty country and receives income from UK sources of:
- purchased annuities
The relief available depends upon the terms of each double taxation treaty and HMRC will decide whether an application is allowable.
Where relief is allowable HMRC will authorise payment either:
- without tax deducted
- with tax deducted at a reduced rate as shown in the double taxation treaty
If tax has already been deducted from previous payments of the income, the repayment of UK tax is made by HMRC.
Double Taxation Relief
Relief from UK withholding tax covered by a double taxation treaty is not automatic.
The overseas company has to apply to HMRC using a form certified in their country of residence, unless it’s covered by the Double Taxation Treaty Passport Scheme.
Applications for relief at source and claims to repayment of UK withholding tax may be made to the HMRC Double Taxation Treaty Team.
- apply for relief at source from UK withholding tax on interest, royalties, pensions and purchased annuities
- claim repayment of UK withholding tax already deducted
You do not need to send tax vouchers with your completed form, but keep them safe in case they are needed later to support your claim. If you have any doubt about how you have completed the form, you can send vouchers if you think it will help.
There are also separate Direct Investor Dividend application forms.
EU cross-border interest and royalties
If your company is based outside the UK but within the EU and receives interest or royalties from ‘associated companies’ in the UK, use form EU interest and royalties to apply for full relief from UK withholding tax where the relevant treaty only gives partial relief. Otherwise, use form DT-Company.
Double Taxation Treaty Passport Scheme
The Double Taxation Treaty Passport Scheme gives certain foreign lenders reduced tax rates on interest payments made by borrowers. The scheme is available to all UK borrowers who are required to withhold income tax at the basic rate on certain loan interest payments to overseas lenders.
Under the scheme, the lenders are recognised by HMRC as residents of countries with which the UK has double taxation treaty. The recognised lenders are known as ‘treaty passport holders’.
Loans dealt with under the scheme can, with HMRC approval, be paid with deduction of withholding tax at the rate specified in the relevant treaty.
The scheme is an alternative to the certified claim method for reclaiming tax withheld.
Applications should be sent to the Double Taxation Treaty team:
Large Business - DTT Team
HM Revenue and Customs
For general enquiries or status updates on applications contact us by:
Telephone: 03000 547 584
If you’re phoning from outside the UK: +44 (0) 3000 547584
Property income distributions paid by UK Real Estate Investment Trusts (REITs)
A ‘UK-REIT’ is a company which has a property business. It must be resident in the UK and listed on a recognised stock exchange.
Under the UK regime, the UK-REIT pays no tax on its qualifying property income, but the company (principal company for a Group REIT) will withhold UK income tax at the basic rate when making a distribution out of its qualifying property income. This is called a property income dividend and the company is obliged to distribute most of its profits this way.
There is more information on REITs in the HMRC manual.
Qualifying non-residents have the opportunity to claim repayment of some or all of the tax that is deducted from property income dividends that are paid by UK-REITs under a number of double taxation agreements.
To claim double taxation relief complete the relevant claim form:
There are guidance notes at the end of each claim form.
Contact details for REITs
HM Revenue & Customs
Telephone: 03000 516 644
If you’re phoning from outside the UK: +44 (0) 3000 516 644
Company ‘portfolio’ shareholders
Some of the UK’s double taxation treaties allow payment to a resident of the other country part of the tax credit attached to UK dividends. But in practice, the amount that the UK retains under the double taxation treaty covers the whole of the tax credit.
So if a company ‘portfolio’ shareholder made a double taxation treaty claim for payment of tax credit, there would be no balance of tax credit remaining for HMRC to pay.
Direct investor companies
The UK’s double taxation conventions with the following countries provide an entitlement to a tax credit to direct investor companies which control 10% or more of the voting power in the UK company paying the dividend:
Claims should be submitted no later than 5 April 2021.
Direct Investor Dividend claim forms
If your company is resident in Italy or Luxembourg you can get the claim form by:
Telephone: +44 (0) 3000 547584
To make sure that you get the correct form please:
- give the company’s full name and address
- say that it is a direct investor company receiving UK dividends
You do not need to send tax vouchers with the completed form, but keep them safe in case they are needed later to support the claim.