Commentary

A4.451 Payments qualifying for exemption from withholding tax under the EU Interest and Royalties Directive

Administration and compliance

A4.451 Payments qualifying for exemption from withholding tax under the EU Interest and Royalties Directive

A4.451 Payments qualifying for exemption from withholding tax under the EU Interest and Royalties Directive

A UK company is normally required to deduct income tax at the basic rate when making a payment of interest or royalty, and to account to HMRC1 for the tax deducted.

Prior to 1 June 2021, where a payment qualified for exemption under the UK domestic legislation which gave effect to the EU Interest and Royalties Directive, the company making the payment was not required to deduct tax and the company receiving the payment had no liability to income tax in respect of that payment2.

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