Double taxation treaty passport scheme
The double taxation treaty passport scheme is a special scheme that allows for double taxation relief on UK loan interest payments made by a UK corporate borrower to overseas corporate lenders.
A double taxation treaty passport can be applied for by a company (or its head office) where the following applies:
- is resident in a country that has a double taxation treaty with the UK;
- is an overseas corporate lender;
- took out a loan on or after 1 September 2010.
HMRC may also issue passports to US limited liability companies and US corporations that elect to pass corporate income, losses, deductions and credits to their shareholders for federal tax purposes.
Once processed, a passport status will usually last for five years. HMRC may carry out a review of any scheme to check it is being operated correctly. The list of overseas lenders who are recognised passport holders was updated on 3 August 2016.
A consultation on the future of the scheme closed on 12 August 2016. The consultation is part of a review of the scheme by HMRC to ensure that it still meets the needs of UK borrowers and foreign investors. We will keep you updated if any changes to the scheme are announced.