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HMRC internal manual

Corporate Finance Manual

Understanding corporate finance: raising finance: longer-term borrowing: Eurobonds


‘Eurobonds’ originated when American industry wanted to raise money in Europe to use for investment in Europe. Commercially, a Eurobond is simply a bond which is issued in a market that is different to the home market of the issuer. So, if a UK company wishes to borrow money in Europe, it might issue bonds in a non-sterling currency in the European market. Where, for instance a German company chooses to issue bonds in sterling in the UK market these would be called ‘bulldog bonds’.

These bonds are normally issued in bearer form (CFM11060), normally pay interest once a year, and normally have a life of five years or more.

Tax definition of a Eurobond

The tax definition of a Eurobond is different to the commercial understanding of the term ‘Eurobond’. The tax definition is in ITA07/S987 and is important in deciding whether tax should be deducted from any interest paid (see CFM75000 and SAIM9000). It includes any interest-bearing security issued by a company and listed on a recognised stock exchange.