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HMRC internal manual

International Manual

HM Revenue & Customs
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UK residents with foreign income or gains: dividends: Direct investors - underlying tax

A direct investor, as defined in INTM164010 (g), is a company which controls directly or indirectly not less than a certain percentage (see INTM164360) of the voting power of the company paying the dividend. It is entitled to tax credit relief for the direct tax charged on a dividend in addition to underlying tax paid on the profits from which the dividend was paid

In addition to tax credit relief for the direct tax on a dividend, where the UK resident shareholder is a company controlling directly or indirectly not less than 10% of the voting power in the foreign company paying the dividend, it is entitled to relief for the underlying tax attributable to the dividend (see INTM164440). The percentage required by the relevant treaty is given in the Credit Article. If this is a higher percentage the UK will allow companies controlling at least 10% to claim underlying relief unilaterally.