Income Tax (Trading and Other Income) Act 2005 section 758

Exemption for certain interest and royalty payments

Section 758 sets out the conditions that must be met for certain interest and royalty payments between associated EU companies and UK companies to be exempt from income tax.

• Royalty payments must satisfy three conditions (A, B and C) to qualify for exemption; interest payments must satisfy an additional fourth condition (D)
• The payer must be either a UK company or a UK permanent establishment of an EU company, and the recipient beneficially entitled to the income must be an EU company
• The paying company and the receiving company must be 25% associates of each other
• For interest payments specifically, HMRC must have issued an exemption notice before the exemption can apply