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Consultation on extending royalties withholding tax

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The government is consulting until 23 February 2018 on the design of new rules announced at Autumn Budget 2017 for extending royalties withholding tax to payments in respect of UK intellectual property made to connected parties in low or no-tax jurisdictions from April 2019, regardless of whether the payer has a taxable presence in the UK.

The measure will only apply to payments between connected parties. A liability will only arise where the payment is made to jurisdictions with whom the UK does not have a DTA, or the DTA does not contain a non-discrimination article.

Two broad options are proposed for defining payments to which the withholding tax will apply:

  • a generic approach applying to any payment for rights over, or interests in, the exploitation of intellectual property and intangible assets of any description in the UK (the government’s preferred option); or
  • defining the specific types of payment within scope of the measure, which would require a statutory list to be kept up to date as business models change.

The government welcomes views on a proportionate mechanism for groups without a UK taxable presence to be registered in the UK and make a return of specific information (effectively that required on a Form CT600H) to HMRC.

There would be joint and several liability for groups with a liability under the proposed measure. This would mean that any liability of a non-UK resident can be paid and collected through any related party with a UK presence.

The government will publish its response and draft legislation in Summer 2018. See

Issue: 1380
Categories: News