Double tax relief

Copyright © 2024 LexisNexis
Produced by Tolley in association with Anne Fairpo
Corporation Tax
Guidance

Double tax relief

Copyright © 2024 LexisNexis
Produced by Tolley in association with Anne Fairpo
Corporation Tax
Guidance
imgtext

When income arises in a foreign country to a UK resident company and that income is taxable in that foreign country, the UK may give the company relief for the foreign tax by crediting the foreign tax against the UK tax charged on that income. This might include withholding tax on interest or royalties, or tax on the profits of an overseas permanent establishment for example. The UK has three options for providing relief from double taxation: two via credit relief and one by way of deduction from the profits of the business.

For further commentary and examples, see Simon’s Taxes D4.803 and E6.4.

Credit relief

Tax treaty relief

The UK has more than 130 tax treaties, which may exempt income from tax in one country or give credit for foreign taxes suffered on income. The precise mechanism will vary from treaty to treaty. Treaty relief takes precedence over other forms of relief for foreign taxes. For details on

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Anne Fairpo
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Barrister

With effect from 1 June 2021, Anne Fairpo is a judge of the First-tier Tribunal sitting in the Tax Chamber. She was previously a fee-paid judge in the same Chamber. Her contributions to LexisPSL Tax and TolleyGuidance were written before her full-time appointment and are her personal view as she is not authorised to write on behalf of the Tribunals Service or the judiciary. Until April 2021, Anne was a tenant at Temple Tax Chambers. She was called to the bar in 2009 after 15 years as a solicitor. Anne’s experience and expertise covers UK and international corporate tax planning and disputes, having acted for a range of clients from small owner-managed businesses to listed multinationals, as well as having advised on intellectual property taxation and UK-US cross-border tax planning, with regard to both direct and indirect tax matters

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  • 10 Jan 2024 08:50

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