Double taxation relief for inter-company loan interest and inter-company royalties

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The following pages contain specialised information for an overseas corporation resident in a country with which the UK has a Double Taxation treaty that provides for relief from UK tax on interest or royalties paid from a source in the UK. They also provide more general information about Double Taxation treaty relief.

An overseas corporation

  • can claim repayment of UK tax already deducted from loan interest, or from royalties, payable by a UK company
  • can apply for relief from UK tax at source in respect of future income

The key documents required to support claims/applications under a DT treaty are

  • loan agreements for inter-company loans
  • licence agreements or contracts for inter-company royalties
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How to make an application for relief

Relief from UK tax provided in a Double Taxation treaty is not automatic. Treaty benefits must be the subject of an application to HM Revenue & Customs (HMRC).

Only the overseas corporation receiving the income can make a valid application.

The application will be dealt with by HMRC. Details of how to make an application are included in the downloadable forms.

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The paperwork: what form do I use?

There are application/claim forms for each relevant Double Taxation treaty country. The forms are dual purpose, in that they provide for both:

  • an application for relief from tax at source in respect of future income from the specified source of interest or royalties
  • a claim to repayment of tax deducted from earlier payments of income

You can get the form(s) from:

To make sure that you get the correct claim form please:

  • give the full name and address of the overseas corporation
  • say that the overseas corporation is receiving loan interest or royalty payments, as appropriate

After completion, the form needs to be certified by the taxation authorities of the overseas corporation's country of residence to confirm that it is a resident of that country.

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Documents and other information to support the application

In both loan interest and royalties cases, the overseas applicant corporation should attach the relevant document to the application/claim.

For loan interest:

  • A copy of the text of any agreement or exchange of correspondence regulating the terms on which the interest is paid

For royalties:

  • A copy of the licence agreement or contract.

If these documents have already been supplied to the HMRC office dealing with the UK company's Corporation Tax affairs, let HMRC Residency know. It will not then be necessary to send the same document in support of the application/claim.

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Syndicated Loan Scheme

A new name for the Provisional Treaty Relief Scheme

Following changes in 2007 to HMRC's Double Taxation treaty relief processes and the subsequent introduction of the Double Taxation Treaty Passport scheme effective from 1 September 2010, the 'one-to-one' loan aspect of the Provisional Treaty Relief Scheme ('PTRS') is no longer needed. This part of the PTRS will therefore be discontinued with effect from 31 August 2010, after which date no 'one-to-one' PTRS applications can be made.

The part of the PTRS dealing with syndicated loans is being retained under the name of the Syndicated Loan Scheme ('SLS'). The SLS enables Double Taxation treaty relief to be given from withholding tax deductible on UK source interest paid to the lending members of a syndicate resident in countries which have Double Taxation treaties with the UK that provide for such relief.

The SLS applies only where the borrower and the lenders are unconnected and the transaction is on arm's length terms. For full details see the SLS Guidelines.

The SLS Guidelines and application forms are available for download by selecting the links below. Please consult the Guidelines before making any application.