Income Tax Act 2007 section 914

European Union

Section 914 allows a company to pay certain interest and royalty payments without deducting income tax where it reasonably believes the EU interest and royalties exemption applies.

• Where a paying company reasonably believes that the EU interest and royalties exemption (section 758 of ITTOIA) applies, it may pay without deducting income tax.
• The exemption covers royalty payments made by UK resident companies, or by a UK permanent establishment of an EU company, to an EU company.
• If the payment turns out not to be exempt despite the company's reasonable belief, the right to pay without deduction is treated as never having existed.
• This means the paying company would retrospectively be liable for the income tax that should have been deducted at source.