The table below shows some of the variations in the wording of UK double taxation treaties, with some indication of the consequences with respect to working thin capitalisation cases. Treaties are continuously being renegotiated and changed, and it is not possible to keep this table constantly up-to-date. You should therefore search the HMRC Internet and Intranet sites to discover whether there is a difference between what is recorded in the table and what is shown in the most recent version of the treaty. If there is a difference and you are not sure how it impacts on your case, contact the Tax Treaty Team at the Central Policy Unit.
| Treaty wording | UK treaty with | Comment |
| 1. Treaty omits Interest Article altogether | Antigua, Belize, Brunei, Grenada, Guernsey, Isle of Man, Jersey, Kiribati, Montserrat, Myanmar, St Kitts, Sierra Leone, Solomon Islands, Swaziland, Tuvalu. | Domestic legislation applies |
| 2. Paragraph 2 of the OECD Model Treaty Convention omitted | Austria, Belarus, Bulgaria, Czech Republic, Denmark, Falklands, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Kuwait, Luxembourg, Netherlands, Norway, Oman, Poland, Russia, Slovak Republic, South Africa, Sweden, Switzerland, Tajikistan, Turkmenistan, Ukraine, USA. | State of residence given sole taxing rights, subject to various tests – see individual treaties, and consult the External Relations Group (Advisory) at Revenue Policy International if in doubt. |
| 3. Paragraphs 1 and 2 of the OECD Model Treaty Convention combined | Australia, Barbados, Cyprus, Israel, Malawi, Namibia. | Interest source state has some taxing rights. See below. |
| 4. Particular wording on taxing rights | Argentina, Australia, Azerbaijan, Bangladesh, Barbados, Belgium, Bolivia, Botswana, Canada, China, Croatia, Cyprus, Egypt, Estonia, Fiji, Gambia, Ghana, Guyana, India, Indonesia, Israel, Italy, Ivory Coast, Jamaica, Japan, Jordan, Kazakhstan, Kenya, Korea, Latvia, Lithuania, Lesotho, Macedonia, Malawi, Malaysia, Malta, Mauritius, Mexico, Mongolia, Morocco, Namibia, New Zealand, Nigeria, Pakistan, Papua New Guinea, Philippines, Portugal, Romania, Serbia & Montenegro, Singapore, Slovenia, Spain, Sri Lanka, Sudan, Taiwan, Thailand, Trinidad, Tunisia, Turkey, Uganda, Uzbekistan, Venezuela, Vietnam, Zambia, Zimbabwe. | Interest source state given primary taxing rights - many of these treaties have particular tests included – see the individual treaties and consult the External Relations Group (Advisory) at Revenue Policy International when in doubt. |
| Definition of interest differs from paragraph 3 of the OECD Model Treaty | Austria, Australia, Bangladesh, Barbados, Belarus, Belgium, Botswana, Canada, Croatia, Cyprus, Czech Republic, Egypt, Fiji, Finland, Gambia, Germany, Greece, Iceland, Ireland, Israel, Italy, Ivory Coast, Jamaica, Japan, Kenya, Luxembourg, Macedonia, Malawi, Mexico, Morocco, Namibia, Norway, Philippines, Poland, Portugal, Romania, Serbia & Montenegro, Slovak Republic, Slovenia, Spain, Sri Lanka, Sudan, Tajikistan, Thailand, Tunisia, Turkey, Turkmenistan, USA, Zambia. | The treaty needs to be
examined carefully to ensure that the definition includes the type
in the case being worked - see the individual treaties and consult
the External Relations Group (Advisory) at Revenue Policy
International when in doubt.
See also below. |
| 5. Omits the sentence ‘The term (interest) shall not include any item which is treated as a dividend under the provisions of Article 10 of this Convention’ found in other UK treaties. | Australia, Austria, Barbados, Belarus, Bulgaria, Croatia, Cyprus, Czech Republic, Fiji, Gambia, Germany, Greece, Hungary, Israel, Ivory Coast, Jamaica, Japan, Kenya, Luxembourg, Macedonia, Malawi, Mexico, Namibia, Nigeria, Philippines, Poland, Portugal, Romania, Serbia & Montenegro, Slovak Republic, Slovenia, Spain, Sri Lanka, Sudan, Switzerland, Tajikistan, Thailand, Tunisia, Turkmenistan, Zambia. | The context of the treaty needs to be examined carefully and in conjunction with Article 10 - see the individual treaties and consult the External Relations Group (Advisory) at Revenue Policy International when in doubt. |
| 6. Includes the wording from the OECD Model Treaty relating to premiums/prizes (paragraph 3) | Azerbaijan, Belgium, Bulgaria, Canada, China, Denmark, Estonia, Falklands, Hungary, India, Jordan, Korea, Latvia, Lithuania, Mauritius, Mexico, Netherlands, Oman, Philippines, Sweden, Switzerland, USA. | Expands definition of interest - see the individual treaties and consult the External Relations Group (Advisory) at Revenue Policy International when in doubt. |
| 7. Includes the wording from the OECD Model Treaty on penalties (paragraph 3) | Azerbaijan, Bulgaria, Denmark, Estonia, Mauritius, Latvia, Mexico, Netherlands, Philippines, Sweden, USA. | Excludes penalties for late payment from definition of interest, but there are variations - see the individual treaties and consult the External Relations Group Advisory) at Revenue Policy International when in doubt. |
| 8. Special relationship provision not present | Germany, Greece, Malawi. | See the third paragraph at the beginning of the section on Article 11 above. The position regarding Germany is more complicated, although defence against thin capitalisation is in place - see the individual treaties and consult the External Relations Group (Advisory) at Revenue Policy International when in doubt. |
| 9. Contains the OECD Model Treaty formula ‘having regard to debt claim’ (or similar) rather than ‘for whatever reason’ | Austria, Barbados, Cyprus, Fiji, Gambia, Israel, Jamaica, Japan, Kenya, Luxembourg, Namibia, Philippines, Portugal, Romania, Spain, Sudan, Zambia. | Despite this, defences against thin capitalisation do exist post FA95 - see the individual treaties and consult the External Relations Group (Advisory) at Revenue Policy International when in doubt. |
| 10. Refers to ‘terms and amount of debt claim’ | Netherlands | See the treaty and consult the External Relations Group at Revenue Policy International when in doubt. |
| 11. Contains neither ‘debt claim’ nor ‘for whatever reason’ | Australia, Botswana, Korea, Morocco, Switzerland. | See the individual treaties and consult the External Relations Group at Revenue Policy International when in doubt. |
| 12. Treatment of excess interest (see typical wording above) omitted. | Australia. | See the individual treaties and consult the External Relations Group (Advisory) at Revenue Policy International when in doubt. |
| 13. Treatment of excess interest (see typical wording above) makes excess taxable as per Dividends Article. | Switzerland | See the individual treaty and consult the External Relations Group (Advisory) at Revenue Policy International when in doubt. |
| 14. Supplementary paragraph overrides the 1995 thin capitalisation legislation. | Spain. | Not possible to recharacterise ‘excessive’ interest payments - see the treaty and consult the External Relations Group (Advisory) at Revenue Policy International when in doubt. |
| 15. Wording of treaty allows recharacterisation of interest but with special terms relating to deductibility | Austria, Fiji, Israel, Sudan. | See the individual treaties and consult the External Relations Group (Advisory) at Revenue Policy International when in doubt. |
