UK corporation tax on foreign income
An ECJ ruling on Dutch tax law could affect the Treasury’s on-going review of the UK corporation tax system on foreign income.
The ECJ has ruled (Amurta SGPS v Inspecteur van de Belastingdienst/ Amsterdam) that the Dutch system of dividend withholding taxes is contrary to EU law.
The decision indicates that an EU member state has a duty to ensure that a taxpayer does not suffer tax on the same income twice. Reliefs granted under the law of another member state, such as foreign tax credits must apparently be ignored but relief under double tax treaties can be factored in.
You may have received dividends from companies established in other EU member states after deduction of withholding taxes that would not have been levied on a taxpayer established in the same member state. Similarly a UK company applies withholding taxes on interest and royalty payments to taxpayers outside the UK and suffers withholding on income received.
If you are affected you may wish to consider reclaiming the tax withheld. Obviously though there is no point if all of the tax has been offset against UK tax due. Going forward though, the law may have to change.
The ECJ has ruled (Amurta SGPS v Inspecteur van de Belastingdienst/ Amsterdam) that the Dutch system of dividend withholding taxes is contrary to EU law.
The decision indicates that an EU member state has a duty to ensure that a taxpayer does not suffer tax on the same income twice. Reliefs granted under the law of another member state, such as foreign tax credits must apparently be ignored but relief under double tax treaties can be factored in.
You may have received dividends from companies established in other EU member states after deduction of withholding taxes that would not have been levied on a taxpayer established in the same member state. Similarly a UK company applies withholding taxes on interest and royalty payments to taxpayers outside the UK and suffers withholding on income received.
If you are affected you may wish to consider reclaiming the tax withheld. Obviously though there is no point if all of the tax has been offset against UK tax due. Going forward though, the law may have to change.
