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HMRC internal manual

Bank Levy Manual

HM Revenue & Customs
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Double Taxation Relief: Germany: maximum amount of UK bank levy against which the relief can be set

Regulation 8 SI2012/459

The bank levy is a charge upon the group’s balance sheet. The German bank levy is a charge upon an individual entity. Therefore where a German bank trades in the UK via both subsidiaries and a Permanent Establishment (‘PE’) only the PE is actually subject to both levies.

This means that the German bank levy has to be apportioned between the subsidiaries and the PE with relief only being due against the German bank levy charge that relates to the PE’s chargeable equity and liabilities.

Rather than set out how this should be done, the bank can use any method that leads to a just and reasonable result.


Bank Brunswick has a London Branch with chargeable equity and liabilities of 100. It also has a UK resident banking subsidiary with chargeable equity and liabilities of 500.

The UK bank levy is 60. Therefore using a straight apportionment the amount of UK bank levy against which double taxation relief can be set is:

60 x 100/600 = 10.

However if the chargeable equity and liabilities in the PE are all short term, while those in the subsidiary are long term then the ‘just and reasonable’ result may be to treat the PE as having 1/3 rather than 1/6 of the bank levy apportioned to it leading to maximum double taxation relief of 20 rather than 10.

HMRC are happy to discuss the apportionment with the responsible member.