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HMRC internal manual

International Manual

DT Agreements: Switzerland - Income from a UK source paid to a resident of Switzerland

UK dividends paid to a resident of Switzerland – portfolio investor

Article 10 of the Convention

The double taxation convention provides for payment of the excess of UK tax creditafter retention of 15% of the aggregate of UK dividend plus tax credit.But for dividends paid since 6 April 1999 there is no tax credit to pay. See INTM343520.

Dividend stripping provisions

Article 10(3)(d)(i) as substituted by protocol SI1982/714 applies dividend strippingprovisions. A resident of Switzerland is not entitled to a tax credit unless he can showthat the shareholding was acquired for genuine commercial reasons or in the ordinarycourse of business and it was not the main object of one of the main objects to obtainentitlement to a tax credit.

You should note that the dividend stripping provisions of the Convention apply to bothcompany and individual claimants. Guidance about dividend stripping as it applies tocompanies that are direct investors can be found at INTM343550.If you have a claim to payment of UK tax credits under the UK/Switzerland Convention andyou are uncertain as to how to proceed please refer the claim to DT Technical Advice.