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HMRC internal manual

International Manual

HM Revenue & Customs
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DT Agreements: Iceland - Income from a UK source paid to a resident of Iceland

UK royalties paid to a resident of Iceland (Article 12)

Full relief from UK tax is available on UK royalties that are paid to a resident of Iceland who is the beneficial owner of the royalties.

Under the terms of Article 12(6) & 12(7) an Iceland company is not entitled to relief, unless either

  • its shares are officially quoted on the Iceland stock exchange, or
  • it is not controlled by a person or two or more associated or connected persons together, who or any of whom would not have been entitled to relief if they had been the beneficial owner of the royalty. See INTM353230 for definition of control.

The DT-Company does not include questions that will determine whether the conditions of Article 12(6) & 12(7) are fulfilled. You will therefore need to write to any company that makes a claim or application for treaty benefits in order to establish if this condition for relief is met. You will also need to consider if a formal enquiry under the terms of the Self Assessment regulations is necessary.