In the 1999 European Court of Justice case Compagnie de
Saint-Gobain v Finanzamt Aachen- Innenstadt the Court decided that
the German tax authorities could not deny a French resident company
with a German branch double taxation relief in respect of the
branch if relief would be allowed to a German resident.
It followed that all residents of the EEA would be entitled
to claim double taxation relief either as a deduction or as a tax
credit. The Revenue announced in March 2000 that the revised
treatment could be given on a claim by any eligible EEA residents
for any years which were in date at the time.
Finance Act 2000 introduced provisions which amended ICTA88/S794
(2)(bb) and apply to all accounting periods ending on or after 21
March 2000. They provide that tax credit relief is available to
residents of any State trading through a branch or agency in the
United Kingdom, although this may be over-ruled in some cases by
specific provisions of the relevant Double Taxation Agreement.
Subject to those specific provisions, relief can now be given to
residents of any state as either a deduction or as a tax credit.
For individual Lloyd’s Names, this change affects the
tax year 1999-2000 and all later years. For corporate members, the
change affects accounting periods ending on or after 21 March 2000,
but in practice most corporate members are resident in the UK for
tax purposes, so this change should not be significant.
For 1999-2000 onwards, relief can only be claimed for 'own
country' tax by way of a deduction, not as tax credit relief. For
example, a resident of France can only obtain relief for French tax
by way of a deduction, not as tax credit relief. Similarly, a US
resident member can only be given relief for US tax by way of a
deduction.
Lloyd's set out on the forms CTA1 an analysis of foreign tax
by country, so that relief can be claimed correctly for 'own
country' tax.
