UK income tax will be charged at a rate of 20% on the gross receipts of a non-resident entity in respect of intangible property to the extent those receipts are referable to the sale of goods or the provision of services in the UK. In addition to various exemptions, the charge will not apply to entities located in jurisdictions with which the UK has a tax treaty containing non-discrimination provisions. It is stated that joint and several liability provisions will enable collection of the tax from connected parties in the event of non-payment by the non-resident entity. This measure replaces the broadening of the scope of the UK’s royalty withholding tax rules proposed at Autumn Budget 2017.
This measure will impact groups holding intangible property through entities in jurisdictions with which the UK does not have a tax treaty with non-discrimination provisions, and in respect of which income is derived from the UK.
This measure will have effect from 6 April 2019.
This change significantly broadens the scope of the income tax regime as it relates to the taxation of intangible property, and ensures that receipts referable to the exploitation of intangible property in the UK are subject to income tax.
Business Tax Policy Lead