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E6.414B Location of source of income for double tax relief purposes

Normally it is necessary for the granting of UK double tax relief that the income on which the relief is being claimed is sourced within the country where the tax is payable.

The legislation on unilateral credit relief refers to 'credit for tax paid under the law the territory calculated by reference to income arising or any chargeable gain accruing in the territory'¹. For credit relief under a treaty, the wording of the agreement will normally provide that credit is only available on tax paid in the country of source². There are some limited exceptions to this rule, for example relating to the Isle of Man and Channel Islands³ The determination of the source is based on the principles of UK domestic law which are in many cases overridden by the provisions of double taxation agreements.

In general terms,