From 1 January 2021, the way that interest, royalties and dividends are paid between UK and EU companies may change and tax may be deducted from some payments.

If this happens you may be able to claim full or partial exemption from these deductions, or claim back some or all of the tax already paid.

Deduction of tax from interest and royalties

Payments from the EU

From 1 January 2021, some EU member states may start to deduct tax from interest and royalty payments made into the UK which used to be exempt.

The amount of tax deducted will depend on the double taxation agreement between the UK and the EU member state.

As a UK company, if you receive royalties and interest in the UK from an associated company in an EU member state, you can usually apply for full or partial exemption, or claim back some or all of the tax you have already paid under the relevant double taxation agreement.

Check the terms of the double taxation agreement between the UK and the EU country where the person paying the interest or royalties is resident. You may need to submit a new or revised claim to the tax authorities of the EU country.

Deduction of tax from dividends

Payments from the EU

From 1 January 2021, some EU countries may start to deduct tax from dividends paid by EU subsidiaries to UK parent companies which used to be exempt.

The amount of tax deducted from these dividend payments will depend on the double taxation agreement between the UK and the EU member state.

Check the terms of the double taxation agreement between the UK and the EU country where the person paying the dividends is resident. You may need to submit a new or revised claim to the tax authorities of the EU member state.