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HMRC internal manual

Double Taxation Relief Manual

Double Taxation Relief Manual: Guidance by country: Japan: Treaty Summary

The table summarises the provisions of the treaty as they relate to income beneficially owned by UK residents. The rate shown is the ‘treaty rate’ and does not reflect taxes chargeable under domestic law before relief is given under the provisions of the treaty. The ‘treaty rate’ is the maximum rate at which Japan is permitted to tax income in the relevant categories under the treaty. Rates chargeable under domestic law may be higher or lower.

In all cases other conditions for relief (e.g. beneficial ownership) will have to be met before relief is due under the treaty. The text of the treaty itself should be consulted for the full details. The text of the treaty can be found on gov.uk.

 

Portfolio dividends 10% (Note 1) Article 10
     
Dividends on direct investments 0% Article 10
Conditions for lower rate on dividends on direct investments The beneficial owner is a company that has owned, directly or indirectly, at  least 10 per cent of the voting power of the paying company for the period of 6 months ending on the date on which the entitlement to the dividend is determined (Note 1) Article 10
Property income dividends 10% Article 10
Interest 0% (Notes 2 and 3) Article 11
Royalties 0% (Note 4) Article 12
Government pensions Taxable only in Japan unless the individual is a national and a resident of the UK Article 18
Other pensions Taxable only in the UK Article 17
Arbitration Yes Article 25

 

Note 1: Dividends beneficially owned by a UK pension fund or scheme are exempt from tax in Japan.

Note 2:  The rate is increased to 10% where the return on debt is contingent on sales, profits or other similar factors (see paragraph 2 of Article 11).

Note 3: A resident of the UK shall not be considered the beneficial owner of interest paid in respect of debt-claims that are part of certain back to back conduit arrangements (see paragraph 6 of Article 11).

Note 4: : A resident of the UK shall not be considered the beneficial owner of royalties paid in respect of intangible property that is part of certain back to back conduit arrangements (see paragraph 5 of Article 12).