A double tax agreement may grant relief in the source country, in the country of which the recipient is a resident, or give relief partly in one country and partly in the other.
For the majority of double tax treaties, relief will only be given to the beneficial owner of the income. The key case in this area is Indofood1, which sets out the international fiscal meaning of beneficial ownership. See also HMRC guidance on their application of this case at INTM332000.
Types of income typically covered by a double tax agreement—relief in country of source
The UK's agreements often grant exemption in the country of source in respect of a number of types of income, including:
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(a)ÌýÌýÌýÌý trading income which does not arise through a permanent establishment (see D4.116). Note that any such provisions (which are commonly found in the business profits article, see F1.512, of relevant double tax treaties) are not to be interpreted as preventing the income of UK residents from being charged to UK tax2
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