Jurisdiction(s):
United Kingdom

Key definition

OECD definition

What does OECD mean? In legal practice, “OECD” refers to the Organisation for Economic Co‑operation and Development, an intergovernmental body of 38 member countries (including the UK and Ireland) whose economic research, standards and policy recommendations often shape domestic law, treaty practice and compliance. The term is descriptive rather than a defined legal term; however, UK and Irish legislation, regulations and treaties frequently incorporate or refer to OECD instruments. Key touchpoints include: - Tax: the OECD Model Tax Convention, OECD Transfer Pricing Guidelines (used by HMRC and Irish Revenue as interpretative guidance), the BEPS project and Pillar Two/GloBE rules implemented in both jurisdictions. -...

UK treatment of treaty interest (OECD Article 11): definition, withholding rates, PEs, special relationships, beneficial ownership and anti-avoidance; HMRC relief procedures

Published by a LexisNexis Tax expert

Practice notes

Article 11 of the Organisation for Economic Co-operation and Development (OECD)'s model tax convention (MTC) is concerned with the taxation of interest paid cross border.

It specifically addresses how taxing authority is divided between:

the state of residence of the person receiving the payment (the recipient state), and
the state of residence of the person making the payment (the source state)

This Practice Note examines:

the meaning of ‘interest’ in a Double tax treaty or convention (DTT) context
the model convention approach to the taxation of interest
targeted anti-treaty shopping provisions
Variations on this approach in DTTs, and
the practical contexts in which an assessment of the interest article will arise

The EU Interest and Royalties Directive, which exempts from withholding tax all interest payments between associated companies of different Member States, and which was implemented into UK law, was repealed following the UK’s departure from the EU, with effect from 1 June 2021 (or from 3 March 2021 if payments were made in disqualifying circumstances), and therefore no longer applies in the UK from those dates), in practice...

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Web page updated on 22/05/2026

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