Policy paper

Income Tax: royalty withholding tax

Additional legislation will provide obligations to deduct Income Tax at source from royalties paid to non-resident persons effective from 28 June 2016.

• From: HM Revenue & Customs
• Published: 16 March 2016
• Last updated: 27 June 2016 — See all updates

Documents

Tax information and impact note on Income Tax: royalty withholding tax

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Draft legislation

PDF, 48.4 KB, 2 pages

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Explanatory note

PDF, 111 KB, 2 pages

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Deduction of Income Tax at source: royalties technical note

PDF, 548 KB, 40 pages

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Details

The government announced on 16 March 2016 that it intended to introduce legislation in Finance Bill 2016 to reform the rules governing the deduction of income tax at source from payments of royalties. The first element of this reform, an anti-treaty abuse rule, was introduced with effect from 17 March. Today the government is announcing that the other elements; widening the class of royalties that require the payer to withhold tax, introducing a clear UK source rule for royalties related to UK permanent establishments and consequential amendments to Diverted Profits Tax, will have effect from 28 June. The legislation will be introduced at Public Bill Committee to the Finance Bill. An updated Technical Note has been published today explaining the legislative changes.

It was originally anticipated that this legislation would be included in Finance Bill 2016 at Report Stage and have effect from Royal Assent. As Royal Assent is not now due until the autumn, introducing the legislation at Public Bill Committee with effect from the 28 June preserves the original intention for the legislation to have effect from summer 2016.

Published 16 March 2016
Last updated 27 June 2016 + show all updates

1. 27 June 2016

   Deduction of Income Tax at source: royalties technical note has been updated.

2. 16 March 2016

   First published.