INTM400110 - EU Interest and Royalties Directive: Anti-avoidance measures

The guidance does not apply to payments made on or after 1 June 2021

Anti-avoidance measures

ITTOIA05/S765(1) says that exemption under the ITTOIA05/S758 does not apply if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the debt-claim in respect of which the interest is paid to take advantage of the provisions. S765(2) applies the same condition to royalty payments.

This measure closely follows the anti treaty-shopping provisions which are to be found in many of the interest and royalty articles of double taxation agreements. The anti-avoidance measure will be applied in a fashion consistent with those provisions. It would be strongly advisable to seek advice from CSTD Business, Assets & International Transfer Pricing Team before action is taken to advise the overseas claimant.