HMRC has updated its technical note, first published at the Budget in March, concerning legislation in Finance Bill 2016 to broaden the scope of the rules for withholding tax on royalties arising in the UK. Chapter 5 contains the anti-treaty-shopping provision applying to payments made on or after 17 March 2016. Chapters 7, 9 and 11 contain legislation being introduced at the Public Bill Committee stage, to have effect from 28 June 2016. These clauses will:
change the definition of a royalty to align with the OECD model tax convention definition;
include payments made by non-UK resident persons where those payments are connected with a trade carried out through a permanent establishment (PE) in the UK; and
ensure that diverted profits tax will apply to payments that would have been subject to withholding had an avoided PE been an actual PE in the UK.
HMRC has updated its technical note, first published at the Budget in March, concerning legislation in Finance Bill 2016 to broaden the scope of the rules for withholding tax on royalties arising in the UK. Chapter 5 contains the anti-treaty-shopping provision applying to payments made on or after 17 March 2016. Chapters 7, 9 and 11 contain legislation being introduced at the Public Bill Committee stage, to have effect from 28 June 2016. These clauses will:
change the definition of a royalty to align with the OECD model tax convention definition;
include payments made by non-UK resident persons where those payments are connected with a trade carried out through a permanent establishment (PE) in the UK; and
ensure that diverted profits tax will apply to payments that would have been subject to withholding had an avoided PE been an actual PE in the UK.
