UK Tax Treaties with Taiwan

E-mail: lon4ww@evershinecpa.com
Ms. Anny Lin, speak both English and Chinese.
WeChat: annylin8008
Skype: annylin8008

Tw-Q-10:
台灣母公司在英國是否可以依DTA申請沒有常設機構(PE)下零稅率?
Taiwan Parent Company, can apply for zero tax rate without PE under DTA in the United Kingdom?

Tw-A-10:

Yes.
Taiwan has DTA with the United Kingdom, and if Taiwan Legal Resident company is without PE (Permanent Establishment), it will be redeemed as “non-United Kingdom Domestic Sourced Income”.
That means the United Kingdom will levy zero-tax.
However, the Taiwan Legal Resident company still needs to send the zero-tax application to the United Kingdom Tax Bureau for being approved.

Tw-Q-20:
台灣母公司在英國設立了英國子公司， 台灣母公司替子公司服務收入能否申請零稅率?
When Taiwan Parent Company as an Investor, set up a United Kingdom subsidiary, and provide services from Taiwan to United Kingdom Subsidiary, can apply for zero tax rate without PE under DTA in the United Kingdom?

Tw-A-20:
According to DTA Article 5 item 7, A United Kingdom subsidiary will not be treated as PE of Taiwan Parent company as an investor because it is a separate legal entity.
That means if a United Kingdom Subsidiary pays service fee to Taiwan Parent Company through a service contract signed between the subsidiary and Taiwan Parent company as an investor, Taiwan Parent Company can apply zero tax.
As for if the paid amount is reasonable, it will get involved TP (Transfer Pricing) judgment by the United Kingdom Tax Bureau.

Tw-Q-30
英國依DTA沒有PE下零稅率申請的程序為何?
What is the procedure for the United Kingdom to apply for a zero tax rate under DTA without PE?

Tw-A-30
Applications for relief at source from the UK withholding tax may be made to the HMRC Double Taxation Treaty Team, using the forms which can be retrieved in HMRC.

https://www.gov.uk/government/publications/international-tax-double-taxation-treaty-relief-form-dt-company

1. Form DT-Company
2. Send the completed form DT-Company to the taxation authorities of the company’s country of residence. By doing this, you can consent to the residence’s tax authorities certifying to HMRC that the company is resident in the other country within the meaning of the Double Taxation Convention between the UK and that country.
3. Next, the taxation authorities of the country of residence will then either send the certified form direct to HMRC or return the form to you to send to HMRC.
4. In some cases, the residence’s tax authorities may not wish to stamp and sign the form DT-Company. If so, please ask them to provide a separate ‘standalone’ certificate to confirm that the company is resident for tax purposes in that country within the meaning of the Double Taxation Convention with the UK.

Tw-Q-40
台灣母公司有英國來源所得的各項所得扣繳稅率為何?
When Taiwan Resident company has United Kingdom domestic sourced income, what are the withholding tax rates for various incomes in the United Kingdom?

Tw-A-40:
Taiwan has DTA with the United Kingdom, and if you are with PE (Permanent Establishment) in the United Kingdom, your income will be considered as United Kingdom domestic sourced income.
As for levying Tax Rate, please be aware:
if United Kingdom Tax rate > DTA Rate, adopt DTA Rate; if United Kingdom Tax rate < DTA Rate, adopt United Kingdom Rate.
If DTA is applied, the DTA rates between Taiwan and the United Kingdom are as below:

*The withholding tax rate under domestic law may apply rather than the treaty rate where the domestic law rate is lower than the treaty rate.

Tw-Q-50
當台灣稅務居民有英國來源所得，依DTA優惠稅率申請的程序為何?
When Taiwan Tax Resident has United Kingdom domestic sourced income, what is United Kingdom’s application procedure based on the DTA preferential tax rate?

Tw-A-50:
Applications for relief at source from the UK withholding tax may be made to the HMRC Double Taxation Treaty Team, using the forms which can be retrieved in HMRC.

https://www.gov.uk/government/publications/international-tax-double-taxation-treaty-relief-form-dt-company

1. Form DT-Company
2. Send the completed form DT-Company to the taxation authorities of the company’s country of residence. By doing this, you can consent to the residence’s tax authorities certifying to HMRC that the company is resident in the other country within the meaning of the Double Taxation Convention between the UK and that country.
3. Next, the taxation authorities of the country of residence will then either send the certified form direct to HMRC or return the form to you to send to HMRC.
4. In some cases, the residence’s tax authorities may not wish to stamp and sign the form DT-Company. If so, please ask them to provide a separate ‘standalone’ certificate to confirm that the company is resident for tax purposes in that country within the meaning of the Double Taxation Convention with the UK.

Summary of Tax Treaty between the United Kingdom and Taiwan

The Taipei Representative Office in the United Kingdom and The British Trade and Cultural Office, Taipei concluded and signed an Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income (Double Taxation Agreements, DTA), on 8 April 2002 and in force on 23 December 2002.

Permanent Establishment

Article 5 states the term permanent establishment (PE) means a fixed place of business which generally includes the followings:
*A place of management
*A branch
*An office
*A factory
*A workshop
*The furnishing of consultancy services through employees or other personnel for periods aggregating more than 6 months.

Withholding Tax

*Article 7 of DTA between the United Kingdom and Taiwan explained, the United Kingdom may not tax payments on business profits rendered by Taiwan corporation unless it is attributable to the permanent establishment situated in the relevant territory.

*In Article 10, dividends paid by a United Kingdom Resident enterprise to Taiwan Resident enterprise, the tax charged shall not exceed 10%. However, no withholding tax is imposed on dividends under domestic law, except on dividends paid by a REIT.

*Article 11 states that where the beneficial owner of the interest is a non-resident, shall be taxed in the territory in which it arises at the rate not exceeding 10% of the gross interest. The rate of withholding tax under domestic law may apply rather than the treaty rate where the domestic law rate is lower than the treaty rate.

*Article 12 explained royalties means payment for the use of, or the right to use, any copyright of literary, artistic, or scientific work (including cinematograph films, and films or tapes for radio or television broadcasting), any patent, trademark, design or model, plan, secret formula or proves or for information (know-how) concerning industrial, commercial, or scientific experience.

*Technical services are covered by the business profits in Article 7. United Kingdom corporations may not tax payments for technical services rendered by a Taiwan enterprise unless it is attributable to PE. No withholding tax is anyway imposed on payments made to non-residents for services under UK domestic law.

*A professional services or other activities provided by individuals of an independent character as explained in Article 14. An independent profession includes physicians, lawyers, engineers, architects, dentists, and accountants. United Kingdom corporations may not tax payments for professional service rendered by a Taiwan resident unless the Taiwan resident has a fixed place in the United Kingdom. No withholding tax is anyway imposed on payments made to non-residents for services under UK domestic law.

Elimination of Double Taxation

Article 22 of the DTA states that double taxation shall be avoided by allowing tax credit to be made available to the home resident territory. It shall be credited against the tax levied in the first-mentioned territory on that resident. However, the amount of credit shall not exceed the amount of the tax in the first-mentioned territory.

Exchange of Information

Article 26 states that the competent authorities of the territories shall exchange such information relevant to the provision of this Agreement.

Please be aware of below Warning:
The above contents are digested by Evershine R&D  and Education Center in October 2021.
Regulations might be changed as time goes forward and different scenarios will adopt different options.
Before choosing options, please contact us or consult with your trusted professionals in this area.

Contact Us

London Evershine BPO Service Limited Corp.
E-mail: lon4ww@evershinecpa.com
Ms. Anny Lin， in both English and Chinese.
WeChat: annylin8008
Skype: annylin8008

For how to exchange data files between your Finance Accounting System and Evershine Cloud Accounting Information System,
please send an email to HQ4lon@evershinecpa.com
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Email address: dalechen@evershinecpa.com
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(version: 2024/07)

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