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HMRC internal manual

International Manual

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

UK interest paid to a resident of Italy (Article 11)

Relief is normally restricted so that 10% tax is retained in the UK where UK interestis paid to a resident of Italy who is the beneficial owner of the interest.

However full relief is available if the beneficial owner is a resident of Italy and theinterest is paid in connection with the sale on credit of

  • industrial, commercial or scientific equipment
  • goods delivered by one enterprise to another.

Full relief is also available where

  • the payer of the interest is the UK Government or one of its local authorities, or agencies or instrumentalities.
  • the loan is made, guaranteed or insured by the United Kingdom Export Credits Guarantee Department.

Any case where full relief is claimed should be referred to Technical Advice Groupbefore any action is taken.

No relief is available where the beneficial owner of the interest is exempt from tax inItaly if the recipient sells or makes a contract to sell the holding within 3 months ofthe date the holding was acquired.