DT19852 - Double Taxation Relief Manual: Guidance by country: United States of America: Treaty summary
The table summarises the provisions of the treaty as they relate to income beneficially owned by UK residents. The rate shown is the ‘treaty rate’ and does not reflect taxes chargeable under domestic law before relief is given under the provisions of the treaty. The ‘treaty rate’ is the maximum rate at which the US is permitted to tax income in the relevant categories under the treaty. Rates chargeable under domestic law may be higher or lower.
In all cases other conditions for relief (e.g. beneficial ownership) will have to be met before relief is due under the treaty. The text of the treaty itself should be consulted for the full details. The text of the treaty can be found on gov.uk.
| Subject | Comment | Article |
|---|---|---|
| Portfolio dividends | 15% | 10 |
| Dividends on direct investments | 5% (Note 1) | 10 |
| Conditions for lower rate on dividends on direct investments | A company which owns shares representing directly or indirectly at least 10% of the voting power of the company paying the dividends | 10 |
| Property income dividends | 15% | 10 |
| Interest | 0% | 11 |
| Royalties | 0% | 12 |
| Government pensions | Taxable only in the US unless the individual is a resident and national of the UK | 19 |
| Other pensions | Taxable only in the UK (Note 2) | 18 |
| Arbitration | No | N/A |
Note 1: Where the beneficial owner of the dividend is a UK resident, dividends paid in the following circumstances are exempt from withholding tax in the US if the beneficial owner is a:
- pension scheme, provided that such dividends are not derived from the carrying on of a business, directly or indirectly, by such pension scheme
-
company that has owned shares representing 80% or more of the voting power of the company paying the dividends for a 12-month period ending on the date the dividend is declared, and that:
- owned shares representing, directly or indirectly at least 80% of the voting power of the company paying the dividends prior to October 1st, 1998; or
- is a qualified person by reason of sub-paragraph 23(2) c) (the Limitation on Benefits Article); or
- is entitled to benefits with respect to the dividends under 23(3) or 23(6)
See further notes below on Article 10 about the conditions for zero withholding tax rate to apply.
Note 2: Remuneration received from a pension scheme that would have been exempt from taxation in the United States is exempt from taxation in the UK.