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HMRC internal manual

Double Taxation Relief Manual

Israel: Dividends

The Israeli tax deducted from dividends at the agreement rate of 15 per cent qualifies for credit as a direct tax (see INTM164010(c)).

The reduction to the above rate is only given if the dividend is subject to United Kingdom tax (see INTM162020) and the dividend is not effectively connected with (see INTM153110 fifth sub-paragraph) a business carried on by the recipient through a permanent establishment in Israel.

Where a dividend is paid to a United Kingdom company which controls, directly or indirectly, at least 10 per cent of the voting power in the Israeli company paying the dividend, credit is also due for the underlying tax (see INTM164010(d)) (Article 18(3)(b).