½Û×ÓÊÓƵ

A4.445 Deduction of tax from cross border royalty payments

The provisions at A4.435 (patent royalties), A4.441 (intellectual property royalties paid to person with usual abode outside UK) and A4.442 (proceeds of sale of patent right by non-UK resident) impose a duty to deduct tax at the basic rate from payments to which they apply.

Where, however, a company pays a royalty from which it is required to deduct tax, and it reasonably believes that, at the time the payment is made, the payee is entitled to relief in respect of the payment under double taxation arrangements, the company may calculate the sum to be deducted by reference to the treaty rate instead of the basic rate¹. See below for anti-avoidance rules intended to prevent 'treaty shopping'.

For these purposes, 'royalty' includes:

1. Ìý

   •ÌýÌýÌýÌý a payment received as consideration for the use of, or the right to use, a copyright, patent, trademark, design, process or information,