How to claim Double Taxation Relief from UK withholding tax on royalties or loan interest paid by a UK company.
When you can apply
If your company is resident in a country or territory that has double taxation arrangements with the UK, you can make an application for Double Taxation Relief to:
- claim repayment of any UK tax already deducted from royalties or interest paid in respect of loans to you by a UK company
- apply for relief from UK tax at source on future income
How to make an application
You won’t get Double Taxation Relief automatically, the overseas resident must send an application to HM Revenue & Customs (HMRC).
Alternatively you may be able to get the appropriate forms from the tax authorities of your country of residence. After completion, you’ll need to get the form certified by the taxation authorities of your country of residence - to confirm that you are a resident of that country for the purpose of the double taxation arrangement. You should attach the following documents to support your application:
- for loan interest - a copy of the text for any agreement or exchange of correspondence regulating the terms on which the interest is paid
- for royalties - a copy of the licence agreements or contracts for inter-company royalties
If you’ve already given these to the HMRC office dealing with the UK company’s Corporation Tax affairs, you won’t need to send them again. But you should attach an additional note to your claim to explain this.
Loans from syndicated companies
If your company is part of a UK syndicate and resident in a country which has a double taxation treaty, you may be able to claim relief on the UK tax paid out by that syndicate, using the Syndicated Loan Scheme.
Give relief on royalties without authorisation
If your company is resident in the UK and has a reasonable belief that an overseas payee of royalties is entitled to relief under a double taxation arrangement, you can give that relief yourself without waiting for HMRC’s authorisation. You’ll then need to include details of any payments in your Company Tax Return.
Interest or royalties made by EU associated companies
If the payments of interest or royalties are being made between EU associated companies (within the meaning of EU Interest and Royalties Directive 2003/49/EC) then withholding tax is relieved in full, and you should use form EU Interest and Royalties.
Alternatively you can give that relief without waiting for HMRC’s authorisation and include the details of the payments on your Company Tax Return if:
- the payments are for royalties only
- your company is a UK payer
- you’ve a reasonable belief that the EU associated companies are entitled to relief under a double taxation arrangement
If you’re an overseas lender with a ‘treaty passport’ then it’s easier to get relief using the Double Taxation Treaty Passport Scheme.