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HMRC internal manual

Double Taxation Relief Manual

Guidance by country: China: 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 China 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% Article 10
     
Dividends on direct investments 5% Article 10
Conditions for lower rate on dividends on direct investments The beneficial owner must hold directly 25 per cent of the capital of the company paying the dividends Article 10
       
  Property income dividends 15% Article 10
  Interest 10% (Note 1) Article 11
  Royalties 10% (Note 2) Article 12
  Government pensions Taxable only in China unless the individual is a national and a resident of the UK Article 19
  Other pensions Taxable only in the UK Article 18
  Arbitration No n/a

 

 

 

 

Note 1: The following interest arising in China is taxable only in the UK:

  1. all interest derived by the UK government, a political subdivision or local authority thereof, the Bank of England, or any agency of, or entity wholly owned by, the UK government;
  2. interest derived by any resident of the UK in respect of loans financed, guaranteed or insured by the UK government, a political subdivision or local authority thereof, the Bank of England, or any agency of, or entity wholly owned by, the UK government.

Note 2: Only 60 per cent of the gross amount of the royalties is taxable in China at the rate of 10% if the royalties are payments for the use of, or the right to use, industrial, commercial, or scientific equipment (i.e. equipment leasing). In all other cases 10% of the full amount of the royalties is taxable.