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HMRC internal manual

International Manual

Double taxation relief: foreign tax credit relief for non-residents trading in the UK: UK branches of non-resident persons - chargeable periods ending on or after 21 March 2000

The limited relief for foreign tax to non-resident banks and life insurance companies trading here (see INTM168310) was extended by FA 2000.

For chargeable periods ending on or after 21st March 2000 the relief is extended to the income and gains of branches and agencies of non-residents generally. This followed a case heard in the European Court of Justice in September 1999 where it was decided in the case Compagnie de Saint-Gobain v Finanzamt Aachen-Innenstadt (Case C-307/97) that Germany could not deny the company, which was resident in France, double taxation relief in respect of the income of its permanent establishment in Germany if such relief would be allowed to a German resident.

Allowance of credit relief for foreign tax is now provided to all non-resident persons (companies and individuals) who have branches or agencies in the United Kingdom. Relief is available in respect of taxes paid other than in the taxpayer’s home state.

The relief extends to underlying tax paid on the profits of subsidiary companies as well as tax charged directly on the taxpayer’s own profits or dividends. Other provisions relating to relief for underlying tax will apply to non-resident companies in the same way as they apply to resident companies. The amount of relief allowed to the branch or agency of the non-resident is, however, not to exceed that which would have been available if the branch or agency had been a person resident in the United Kingdom and the income or gains in question had been income or gains of that person.

Residents of other EU/EEA Member States who were not able to claim double taxation relief under previous UK law in respect of the income and gains of their UK branches and agencies have been invited to make claims to relief for previous chargeable periods, subject to the normal time limits. Full details were published in a Press Release published on 21st March 2000, PR REV14/2000.