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HMRC internal manual

Bank Levy Manual

From
HM Revenue & Customs
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Double Taxation Relief: Germany: how relief is calculated

The protocol to the Double Taxation Convention (see BKLM740210 for a link to the convention) between the UK and Germany with regard to bank levies sets out how relief is to be calculated.

Step 1

Multiply the relevant liabilities of the Permanent Establishment (‘PE’) by the German bank levy rate applicable to the relevant liabilities.

Step 2

Multiply the relevant derivatives of the PE by the German bank levy rate applicable to the relevant derivatives.

Step 3

Calculate the proportion of any special contribution that is applicable to the PE.

Step 4

Add the results of Steps 1 to 3 together to arrive at the maximum amount of German bank levy for which relief can be given.

Note: When considering the relevant liabilities, derivatives and the proportion of any special contribution that are attributable to the PE, the 2008 OECD report entitled ‘Attribution of profits to Permanent Establishments’ (PDF 1250KB) () should be used.

The German bank levy is subject to banding. There is no need to consider the bands when calculating the German bank levy rate under Steps 1 and 2. Instead the effective average rate should be used.