Overseas interest income

By Tolley

The following Corporation Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Overseas interest income
  • Authorised accruals basis in accounts
  • Time limit for claims

Interest charged by a UK company to an overseas borrower may be taxed in the borrower’s country by way of withholding tax. It can be complicated to determine exactly where the interest has arisen for tax purposes, but the UK tax treaties generally determine the interest to arise in the country where the recipient is resident (or where it has a permanent establishment if the interest is attributable to the PE).

The amount of withholding tax will depend on the jurisdiction of payment and whether there is a tax treaty with the UK. Where withholding taxes are suffered, credit may be available in the UK for at least some of that withholding tax against UK corporation tax. A claim for treaty benefits must be made,

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