Double taxation relief—summary
Double taxation relief—summary

The following Private Client guidance note provides comprehensive and up to date legal information covering:

  • Double taxation relief—summary
  • Taxing rights over income and capital
  • Unilateral relief—income and capital gains
  • UK resident interest in possession trusts—double tax relief on income
  • UK discretionary trusts—double tax relief on income
  • Double tax conventions—gifts and inheritances
  • Unilateral relief—gifts and inheritances
  • EU law on the double taxation of individuals

International tax law is mostly concerned with the taxing rights of states. As with all forms of international law, the need to deal with such issues arises from jurisdictional conflict. Such conflict can arise when more than one state claims the right to impose a similar levy on the same arrangement or transaction.

There are two types of double taxation:

  1. economic double taxation, which focuses on the continuity of the tax object (ie the same property being taxed), and

  2. juridical double taxation, which focuses on the continuity of the tax subject (ie the same person being taxed) and can be defined as: two or more taxes, imposed on the same property, in the hands of the same person, during the same period, for the same purpose

Double taxation can be eliminated or reduced by the domestic law of the UK and of other countries (see below Unilateral relief—income and capital gains), as well as by double tax treaty (DTT). The Organisation for Economic Co-operation and Development (OECD) has developed a model DTT (OECD Model Convention) and issues a commentary on the meaning of those terms and the way that they can be interpreted by the countries which are party to a treaty.

DTTs can provide relief from double taxation in one of three ways:

  1. full relief—the source state gives up all its taxing rights