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HMRC internal manual

Bank Levy Manual

Double Taxation Relief: Germany: background

Bank levies are not covered by the UK’s existing network of Double Taxation Conventions and so an agreement has been signed with Germany specifically for giving relief for the German levy against the bank levy.

Although the Double Taxation Agreement (‘DTA’) was not signed until the 7 December 2011, relief will be due from 1 January 2011, the effective date of the bank levy, once the DTA comes into force (currently this is expected by the end of 2012 following completion of the German legislative process).

The principle of home state primacy has been adopted for relief in respect of the German bank levy and this means that the UK will give relief for any German charge in respect of entities also subject to the bank levy.

Due to the design of the German bank levy only German banks trading in the UK via a Permanent Establishment are subject to both the UK and German charges. Non German resident subsidiaries of German banks chargeable to the UK bank levy are not charged to the German bank levy and so the proportion of the group’s bank levy charge that derives from these entities’ chargeable equity and liabilities is ignored for the purposes of the double taxation relief computation.

The rules setting out how relief for the German bank levy is to be calculated and allowed against the UK bank levy are contained within regulations and the bank levy DTA.

The Bank Levy (Double Taxation Arrangements) (Federal Republic of Germany) Regulations 2012 (SI2012/459) (web) () andThe Double Taxation Relief (Bank Levy) (Federal Republic of Germany) Order 2012 (SI2012/432)(web) () contain the double taxation convention.