Double tax treaty meaning

This checklist highlights the principal tax considerations when handling distressed corporate debt, addressing in turn: acquisitions of non-performing loans debt restructurings (ie waivers, debt/equity swaps and renegotiations) enforcement of debts For fuller analysis of the points signposted here, see Practice Notes: Tax and distressed debt—acquisitions of non-performing loans Tax and distressed debt—debt restructurings Tax and distressed debt—enforcement actions available to creditors Acquisitions of non-performing loans This part summarises the tax considerations when a buyer takes on existing UK debt at a discount to face value: Where should the purchaser be located? will interest paid by the borrower to the purchaser be subject to withholding tax? if the purchaser is non-UK resident, can relief be obtained under a double tax treaty? to what extent will amounts received from borrowers be chargeable on the purchaser? How will the debt...

Double tax treaties (DTTs) have a dual nature. They function simultaneously as: international agreements between contracting states, and elements of a contracting state’s domestic law For a DTT to take effect, each contracting state must: sign and ratify the treaty, and incorporate the treaty’s provisions into its domestic legislation In some jurisdictions, a DTT is given automatic domestic effect as soon as it is signed and ratified. Elsewhere, including the UK, a further legislative step is required. In the UK, the arrangements set out in a DTT (and any amending protocol) are brought into domestic law as schedules to Orders in Council and are published as statutory instruments (SIs). After the DTT has taken effect in the domestic law of both the UK and its treaty partner, and any additional formalities or procedures required by the DTT (such as exchanging diplomatic notes) have been completed, the DTT will come into force. The treaty will...

In this issue: Budgets and Finance Bills Companies and corporation tax International Funds Real estate tax Employment Taxes Individuals and income tax Energy and environment Anti-avoidance Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Budgets and Finance Bills Spring Statement 2025 The Chancellor of the Exchequer is set to deliver her Spring Statement to Parliament on Wednesday 26 March 2025. Finance Bill 2025 to receive Royal Assent Royal Assent for the Finance Bill 2025 is expected on 20 March 2025, at which point it will be enacted as the Finance Act 2025. This comes after the Bill’s second and third readings in the House of Lords on 19 March 2025 and the usual bypassing of the committee stage. The House of Lords made no amendments to the Bill as received from the House of Commons. See: Finance Bill 2025...

In this issue: Budgets and Finance Bills Companies and corporation tax Brexit and tax Real estate tax Individuals and income tax Stamp and transfer taxes VAT Daily and weekly news alerts New and updated content Dates for your diary Trackers New Q&As Useful information Budgets and Finance Bills King’s Speech 2024 His Majesty the King outlined the government’s priorities, agenda and intended measures for the forthcoming parliamentary session during the State Opening of Parliament on 17 July 2024. Initial reactions from the Private Client community to the announcements have been collated. See: LNB News 17/07/2024 92. CIOT letter to the new Exchequer Secretary to the Treasury The CIOT has written to the incoming Exchequer Secretary to the Treasury, James Murray MP, setting out tax matters for the new administration. See: LNB News 17/07/2024 22. Companies and corporation tax Supreme Court finds advisers’ fees were capital in...

Court of Appeal judgment – 27 May 2025 Because Susquehanna International Securities Ltd and two affiliates sit beneath a disregarded Delaware vehicle that bears no tax liability, the Court of Appeal (27 May 2025) held they fall outside the scope of the US–Ireland double-taxation treaty. Consequently, the Susquehanna entities cannot invoke the treaty’s equal treatment clause to claim an Irish tax relief reserved for residents of the European Economic Area, the court ruled. The companies had sought to rely on Section 411 of the Taxes Consolidation Act 1997, which permits tax relief to be surrendered within companies, the judgment noted. The court stated: ‘The central issue between the parties is whether it is material that the taxpayers’ parent is treated as fiscally transparent for the purposes of US tax law’...

Many UK-resident companies are expected to operate solely within the UK, with their entire customer base and supplier network located here, so that all profits and gains arise from UK activity undertaken domestically within national borders. Nevertheless, this is not universal; for a sizeable proportion of UK companies, overall profits also comprise non-UK amounts earned from activities outside the UK...

Except where an exemption or relief applies, payments of: annual interest (or amounts that tax rules treat as annual interest), and that have a UK source must be made under deduction, with the payer required to withhold and account to HMRC for UK income tax at the basic rate (20%) or, from 6 April 2027, at the savings basic rate (22%) (for more detail, see Practice Note: UK withholding tax on yearly interest). This Practice Note describes the duty to deduct (and account to HMRC for) UK income tax from UK‑source annual interest as a withholding tax, even though it is in substance a mechanism for collecting UK income tax from the UK‑based payer rather than from the recipient who: is the beneficial owner of the income, and is likely to be based outside the UK For more information on the requirement to deduct UK income tax from UK‑source annual interest, see Practice Note: Administration...

Migration Migration concerns a change in a company’s tax residence. A business might choose to migrate for numerous reasons: its fiscal profile in the current jurisdiction, or its capacity to secure relief under double tax treaties (DTTs). Equally, shifts in a company’s operations or governance can make an alteration of tax residence necessary or beneficial. For an outline and comparison of the factors when selecting a tax jurisdiction for a corporate group’s holding company, see Practice Note: Holding company jurisdictions—tax considerations. In practice, there are several routes by which a UK tax resident company (or group) may move from the UK, or restructure to reach an equivalent outcome for tax purposes. As set out below, these include: direct emigration—where a UK tax resident company relocates its tax residence outside the UK corporate inversion—by inserting a new, non-UK resident holding company above the existing UK parent of the corporate group Alternatively, in suitable circumstances, a further route is to sell all of...