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HMRC internal manual

Savings and Investment Manual

Payment of interest overseas: bond documentation

Redemption clause

The commercial expectation is that interest on international bonds will be paid without deduction of tax. For example, the Eurobonds exemption under the UK legislation was introduced in order to provide for gross payment on qualifying cross-border bond issues. Bond documentation will normally include a clause permitting the issuer to redeem the bonds early in the event that a withholding tax obligation is imposed in respect of interest payments.