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HMRC internal manual

International Manual

Double Taxation applications and claims:- applicants/claimants: partnerships: Background

How Double Taxation Agreements treat partnerships

Double Taxation Agreements (DTAs) do not normally give a tax-transparent concern such as a partnership the right to claim treaty relief. Instead, in those cases where the income of the partnership is taxable in the hands of the partners (rather than at the level of the partnership) each partner should in strictness make a separate claim to treaty relief.

Further information about many business concerns in other countries that are considered to be transparent for tax purposes can be found at INTM180030.

HMRC’s approach to Partnerships

We recognise that applying the provisions of the DTA in such a literal way would be unwelcome and could possibly hamper the business interests of both countries.

Accordingly, HMRC may accept a single claim from a partnership on behalf of its partners. Where a partnership wishes to take advantage of this departure from the strict position and to claim treaty benefits on behalf of its partners, the general or managing partner should sign the declaration on the claim form. In addition to the normal information that is required by the claim form, a list of the names and addresses (residential addresses for individuals and registered addresses where the partners are companies) of the partners should be supplied. These lists should also normally show for each partner their respective percentage shares of the income that is the subject of the claim. In those cases where all of the partners are resident for tax purposes in the same country as the one in which the partnership is established (the country with which the DTA applies) it is not necessary to insist upon this information being provided.

Where any of the partners are resident for tax purposes in a country other than that in which the partnership is established, they should make separate claims to relief from UK tax under the terms of any relevant DTA.

In cases where such a partner is resident in a country which (unusually) does not regard the partnership as fiscally transparent - which would mean that it regards the partnership rather than the UK payer as the source of the payments its resident receives - then that partner may have difficulty in getting a claim form certified as relevant to a DT treaty with the UK. In such rare cases, you should consider accepting an uncertified claim form. If you decide to invite a claim in these circumstances you should ask for the claim form to be supported by additional evidence (for example copies of recent tax returns) to show that the partner is resident for tax purposes in the country concerned. Any such case should be referred to Specialist Personal Tax, PT International Advisory at an early stage.