Overseas royalties and other income from intangibles

By Tolley

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

  • Overseas royalties and other income from intangibles
  • Non-trade intangibles
  • Trade intangibles

Where a UK company receives royalties, the company may suffer withholding tax in the jurisdiction where the payments are made. The level of withholding tax will depend on the jurisdiction (eg the Netherlands has no withholding tax on royalties, regardless of the country to which they are paid) and whether or not there is a tax treaty between the UK and that country. Tax treaties will reduce royalty withholding taxes substantially, often to nil. A claim for treaty benefit will be required to ensure the payment of royalties is made with no / reduced withholding as appropriate. See the Withholding tax guidance note.

Where a UK company suffers withholding tax on royalties received from overseas licensees, credit can be given in the UK for that withholding tax against UK corporation tax due on the royalty income.

The calculation of the maximum UK tax credit available follows the usual principles, requiring a UK mini-calculation to determine t

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