Taxes Consolidation Act 1997 section 267K

Miscellaneous

Section 267K provides that the withholding tax exemption for interest and royalty payments between closely associated companies in EU Member States only applies to genuine commercial payments, and includes an anti-avoidance rule and a notification obligation.

• The withholding tax exemption under sections 267G to 267J applies only where interest or royalty payments are made for bona fide commercial reasons.
• The exemption does not apply if the payments form part of any arrangement or scheme whose main purpose, or one of whose main purposes, is the avoidance of income tax, corporation tax or capital gains tax.
• If a company that has received exempt payments of interest or royalties ceases to meet the requirements for exemption under the EU Interest and Royalties Directive, it must immediately notify the paying company.
• This is an anti-avoidance provision designed to prevent the misuse of the cross-border withholding tax exemption regime.