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D4.815 Dividends and DTR—overview

The exempt distribution regime broadly provides that most dividends received by a UK company (from the UK or overseas) will be exempt from corporation tax (see Division D5.1). The provisions discussed in this article apply to overseas dividends that are not exempt.

Double tax relief is available for overseas dividends received in the UK. The legislation provides that relief is available for:

1. Ìý

   •ÌýÌýÌýÌý underlying tax, provided the UK company is related to the paying company, and

2. Ìý

   •ÌýÌýÌýÌý withholding tax (ie foreign tax paid directly on a dividend)

Relief can be given in the form of a credit or a expense.

The situation is straightforward for withholding tax, as the amount withheld can simply be credited (or expensed) under the general rules detailed at D4.801AA.

However, the situation is more complex for underlying tax