The following Tax practice note provides comprehensive and up to date legal information covering:
The double taxation treaty passport scheme (DTTP scheme) enables a borrower to apply for and obtain an expedited authorisation to pay UK source interest to a non-UK lender in accordance with the reduced rate of withholding tax (which could be 0%) provided for in the relevant double tax treaty (DTT) with the UK if the lender has already obtained a passport certifying that it is entitled to the benefit of the relevant DTT.
This Practice Note explains:
how the DTTP scheme provides a simpler and faster method of obtaining relief in accordance with a relevant DTT when compared to the normal certified claim method
the types of lenders that are eligible for a DTTP passport
the duration of the validity of a DTTP passport
who can be borrowers under the DTTP scheme, and
the procedure that must be followed in order for the expedited relief under the DTTP scheme to apply, including the lender’s and the payer’s ongoing obligations
Before explaining the above-mentioned points, however, this Practice Note summarises the position that would apply if relief were not available.
Unless an exemption or a relief applies, a payment of yearly interest arising in the UK (ie with a UK source) is generally subject to UK withholding tax at the basic rate (currently, 20%) if
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