Digest of Double Taxation TreatiesApril

Digest of current double taxation treatiesThis Digest is only a guide to possible entitlement to double taxation relief for certain types of UK income received by non-residents of the UK who are residentsof the territories listed in the table. It does not explain the conditions for relief. You may need to refer to the text of the particular double taxation treaty for fulldetails. Some of these treaties have been amended by one or more Protocols, which are published separately with a new Statutory Instrument (SI) number. AnyProtocol should be read in conjunction with the text of the original treaty. Statutory Instruments.DT Digest 'A to Z' table of territoriesStarting on page 5 there is an 'A to Z' listing of the territories with which the UK has a current comprehensive double taxation treaty. Throughout the table: The column headings show the territory name, the appropriate claim forms, the main sources of UK income and whether or not treaty relief is available. Where ‘full relief’ is shown, all of the UK income tax is relievable under the treaty if a satisfactory claim is made. Where a percentage rate is shown it is the ‘treaty rate’. The relief from UK tax is the excess of the UK income tax over the treaty rate. The basic rate ofUK income tax is 20%. So if (for example) the treaty rate is 15% then the excess of 5% tax is relievable if a satisfactory claim is made. The numbers shown in red are the relevant Article numbers of the treaty. Where an abbreviation [for example (ST)] is shown, please use the Key on page 4. Where a treaty is recent, the effective date for UK income tax purposes is shown in the table.If you are resident in the UK and are completing a Self Assessment return that includes ‘foreign’ pages, and need information to work out the amount of foreign tax credit relief that is available (whether a restriction applies to the amount of foreign tax that can be allowed),you can look up the appropriate territory in the list of Countries with Double Taxation Agreements with the UK – rates of withholding tax.Claim formsIn the table, the 'Claim form' column shows the form to use when making a treaty claim to relief from UK tax on interest, royalties, pensions or annuities(for example, form DT-Individual or DT-Company).If you are a non-resident individual claiming UK personal allowances, please use form R43 for the appropriate UK tax year.You can download forms from our website using the Search facility. Or contact your HM Revenue & Customs Office.

State PensionThe State Pension is paid to people who have reached State Pension age. It is based on National Insurance contributions (NICs) and relief from UK income tax is availableunder the terms of many, but not all, double taxation treaties. For that reason it is important to check the text of the relevant treaty.Government' pensions (pensions that are paid to former Government or local authority employees)If you receive a pension that is paid for service to the UK Government or a local authority, it is important that you look at the text of the relevant double taxationtreaty. This is because: A pension paid by the Government of a territory to one of its former employees will, under most but not all double taxation treaties, continue to be taxed by thatGovernment. However that is not always what has been agreed in a particular treaty and there are variations to this general rule. Some treaties also provide that, in addition to pensions paid by central government, pensions that are paid to former employees of local authorities will continue to betaxable by the territory that is making the payments. Many treaties provide that where the person who is paid a government pension by one territory is a national of (and resident in) the other territory then the right to taxthe pension is transferred from the UK to the territory in which the person is resident. These treaties are identified in the table by the abbreviation (N & R) or(UK N excl) as appropriate.There is guidance on whether a particular pension is treated as being a ‘Government’ type pension in the HM Revenue & Customs International Manual at INTM343040.Property Income DividendsReal Estate Investment Trusts (‘UK-REITs’) and Property Authorised Investment Funds (‘PAIFs’) pay property income dividends (‘PIDs’) with tax deducted at the basic rate.Investors may be able to claim repayment of some or all of that tax depending on the terms of the relevant double taxation treaty.Property Authorised Investment Funds: PAIF distributions (interest)The treatment of a PAIF distribution (interest) for double taxation treaty purposes depends on the terms of each treaty. Under most double taxation treaties, a PAIF distribution (interest) falls within the Dividends Article. The rate of withholding tax on a PAIF distribution (interest) is thesame as that for a property income dividend (for example, 15%), except where shown otherwise in the Notes to the Table of Territories. Under a small number of double taxation treaties, a PAIF distribution (interest) falls within the Interest Article.The abbreviation ‘(PAIF dist int)’ in the ‘DIVIDENDS’ or ‘INTEREST’ column of the Table of Territories (starting on page 6) indicates whether the Dividends or InterestArticle will apply to a PAIF distribution (interest).Dividends paid by UK companies to ‘direct investor’ companies (which control 10% or more of the voting power in the UK companypaying the dividend)A few of the UK's older double taxation treaties provide specific entitlements to direct investor companies resident in the other territory. These are identified in the Notescolumn by the abbreviation (TC 5% Dir). See the Key on page 5 for details.Dividends paid by UK companies to individuals and company 'portfolio' investorsA few of the UK’s older double taxation treaties contain provisions for a portfolio shareholder to claim payment of part of the tax credit attached to UK dividends. But inpractice, the amount that the UK retains under the double taxation treaty covers the whole of the tax credit. So if a shareholder made a double taxation treaty claim for thetax credit, there would be no balance of tax credit remaining for HM Revenue & Customs to pay.

UK Personal Allowances for non-residentsSome of the UK’s double taxation treaties provide for personal allowances to certain categories of individuals (for example, nationals of the other territory who areresident in that territory).In addition to the provisions of any double taxation treaty, if you are not resident in the UK you may use form R43 to claim the same UK tax allowances as aUK resident if, at any time in the tax year you meet any of the following conditions:a. You are a British citizen or a national of another member state of the European Economic Area (EEA). The EEA member states are: Austria, Belgium, Bulgaria, Cyprus,Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands,Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and United Kingdom.b. You are resident in the Isle of Man or the Channel Islands.c. You have previously resided in the United Kingdom and are resident abroad for the sake of your health, or the health of a member of your family who is resident with you.d. You are or have been employed in the service of the British Crown.e. You are employed in the service of any territory under Her Majesty's protection.f. You are employed in the service of a missionary society.g. You are a widow, widower or surviving civil partner whose late husband, wife or civil partner was employed in the service of the British Crown.Commonwealth citizensFor all tax years from -11 onwards, it is not possible for a non-resident of the UK to claim personal allowances solely on the grounds of being a Commonwealthcitizen. Individuals are however entitled to personal allowances if they meet any of the conditions set out at a to g above, or if they qualify under the provisions of a doubletaxation treaty. If you are a Commonwealth citizen and you do not qualify for personal allowances under any of the conditions above, use the DT Digest to check whetherthere is a double taxation treaty with your country of residence that provides for personal allowances. The abbreviations shown in the table (for example N & R) areexplained in the Key on page 5.There is guidance on personal allowances in the HM Revenue & Customs Residence, Domicile and Remittance Basis Manual (RDRM) at RDRM10300.How to contact HM Revenue & Customs.

Key to abbreviations used in the Table of Territories(N & R)Relief (or allowances) available only where the individual is both a national and a resident of the territory.(N)Relief (or allowances) available to a national of the territory, wherever resident.(R)Relief (or allowances) available to a resident of the territory.(UK N excl)Relief is available only where the individual is a national of the territory andis not also a UK national.(ST)The income must be subject to tax in the territory to qualify for relief from UK tax.(ST - 3 months)Subject to tax condition is imposed only if the (quoted) securities that give rise to the interest are sold within 3 months of acquisition.(PAIF dist int)Indicates whether the Dividends Article or the Interest Article of the treaty will apply to a PAIF distribution (interest).See the note about Property Authorised Investment Funds on page 3.(TrAd excl)Other income article excludes income from trusts andincome paid during the administration period of a UK estate.(Tr excl)Other income article excludes income from trusts.(TC 5% Dir)UK dividends: Direct investor companies (which control 10% or more of the voting power in the UK company paying the dividend)The double taxation treaty provides to direct investor companies an entitlement to a tax credit equal to half the tax credit to which a UK residentindividual would be entitled and for payment of the excess of that half tax credit over their liability to UK tax. UK tax liability is 5% of the aggregateof the dividend and the half tax credit.

Table of TerritoriesThe table includes the main sources of UK income for which relief from UK Income Tax may be available. See pages 2 to 4 for more information.The Key on page 5 gives an explanation of the abbreviations used, for example (ST).TERRITORYALBANIANote 1Note 2SI No3145ALGERIANote 1SI No3145CLAIM FORMS PAIF dist int)Note ualDT-Company15%(PAIF dist int)INTERESTROYALTIES6%Note 4Full reliefGOVERNMENT OTHERPENSIONSPENSIONS/ANNUITIESFull reliefFull reliefNote 5OTHERINCOMEARTICLEYes(TrAd te 210%Full relief(N & R)No reliefNote 3YesNote TIGUA &BARBUDANote; 1Note 2SRO1947No2865and ProtocolDT-IndividualDT-CompanyARGENTINANote 1SI o reliefNo reliefFull relief(ST)No reliefFull(ST)Note 3NoNoNote dist int)12%(ST-3 mths)Note 2Note 311124.107Full reliefFull reliefNote 4YesNote 5Yes(N & 8214.ARMENIANote 1Note 3SI ualUK-REITDT-Company15%(PAIF dist int)Note 1Note 25%Note 1Note 1Full relief(UK N excl)Note 3Full reliefNote 3Yes(TrAd excl)Note 1No5.1.2.10 Crown 5%11121821176Treaty effective in UK from 6 April.Relief may be restricted if whole amount of income isnot remitted to Albania.5% where the property income dividend is beneficiallyowned by a pension scheme resident in Albania.Full relief in certain circumstances.Includes State Pension, Incapacity Benefit and ‘trivialcommutation lump sum’.Treaty effective in the UK from 1 January forwithholding taxes and 6 April for income tax.Exemptions apply to certain categories of interest(Article 11(3)).UK source pensions are taxable in the UK. Socialsecurity pensions are taxable only in the UK.Income from UK trusts or estates in the course ofadministration is treated as arising from the samesources, and in the same proportions, as the incomereceived by the trustees or personal representativesout of which the income to the Algeria resident is paid.No relief for companies entitled to special tax benefitsin Antigua.Relief may be restricted if whole amount of income isnot remitted to Antigua.Includes State Pension if ‘subject to tax’. No relief for‘trivial commutation lump sum’.Treaty does not provide for allowances. For the taxyear ended 5 April only, Commonwealth citizensare entitled to personal allowances wherever resident.Relief may be restricted if whole amount of income isnot remitted to Argentina.Full relief in some circumstances.Rates of:3% on news,5% on copyright royalties other than films and TV,10% on patents,15% for other royalties.Includes ‘trivial commutation lump sum’. No relief forState Pension.Applies only to income from third countries.For UK tax deducted at source from property incomedividends, interest, royalties, annuities not subject toPAYE and other income, the treaty is effective in theUK from 1 January. No relief for these types ofincome paid before that date.Full relief (from 1 January) on property incomedividends and PAIF distributions (interest) that are