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HMRC internal manual

Double Taxation Relief Manual

From
HM Revenue & Customs
Updated
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Venezuela: Interest and royalties

Interest arising in Venezuela and paid to a resident of the United Kingdom who is the beneficial owner of the interest and subject to tax on it, is taxable in Venezuela at a rate not exceeding 5 per cent (Article 11(2)).

Venezuelan source interest paid to a United Kingdom resident who is the beneficial owner of the interest and subject to tax on it is however exempt from Venezuelan tax if:

the payer is the Venezuelan Government or a Venezuelan local authority (Article 11(3)), or

the interest is in respect of a loan made, guaranteed or insured by the United Kingdom Export Credits Guarantee Department (Article11(4)).

Royalties for the use of any patent, trademark, design or model, plan, secret formula or process, or for information (know-how) concerning industrial, commercial or scientific experience arising in Venezuela and paid to a resident of the United Kingdom who is the beneficial owner and subject to tax on them are taxable in Venezuela at a rate not exceeding 5 per cent. Other royalties may be taxed at a rate not exceeding 7 per cent if the other conditions are met (Article 12(2)).

Income from ordinary leasing activities and payments received as consideration for technical services, including studies or surveys of a scientific, geological or technical nature, or for consultancy or supervisory services are to be taxed in accordance with the provisions of Article 7 or Article 14 as the case may be. However if the leasing activities include to a substantial extent a transfer of technological know-how, the payments paid as consideration for such a transfer are to that extent to be considered as payments for the use of, or the right to use, industrial, commercial or scientific experience and are to be taxed as royalties.

For the purposes of Articles 11 and 12 the following residents of the United Kingdom are deemed to be subject to tax in the United Kingdom:

(a) the Government of the United Kingdom or a political subdivision or local authority thereof or any agency or instrumentality of the Government, subdivision or authority;

(b) a company which is resident in the United Kingdom and

(i) at least 50 per cent of the share capital of which is owned by the United Kingdom Government or by a political subdivision or local authority thereof; or

(ii) which is engaged in an active trade or business in the United Kingdom; or

(iii) the principal class of shares of which is substantially and regularly traded on a recognised United Kingdom stock exchange;

(c) an individual who is resident in the United Kingdom.

Where however the interest or royalty is effectively connected (see INTM153110) with a permanent establishment or fixed base which the United Kingdom resident recipient has in Venezuela the provisions of the Business Profits Article (Article 7) or the Independent Personal Services Article (Article 14) will apply.