INTM344010 - DT applications and claims - Types of income: Distributions
Background
Dividends paid by a UK company are not allowable as a deduction when calculating the company바카라 사이트™s liability to corporation tax on its profits. However, payments of interest, royalties, annuities etc are generally deductible as a charge on income. The result is that it is more favourable to a company if it can distribute its profits to shareholders by means of interest payments rather than as a dividend. ICTA88/S209 to S211 provides that certain payments of interest will be treated as distributions. They are therefore not deductible for the purposes of corporation tax.
It is normally the case that the interest article in a Double Taxation Agreement (DTA) specifically excludes payments treated as distributions. Treaties where relief is not available under the terms of the interest article will include the words 바카라 사이트śbut does not include income dealt with in Article 10 of this Convention (or Agreement)바카라 사이트ť (or something similar) in the paragraph that defines what is meant by the word 바카라 사이트śinterest바카라 사이트ť.
In such a case the dividend article of the DTA usually includes in the definition of the term 바카라 사이트śdividends바카라 사이트ť any item which is treated as a distribution under the laws of the country in which the payer of the income is resident. In these circumstances relief is only available under the dividend article. The amount of relief that is available under the dividend article is usually less than is available under the interest article and so less favourable to the claimant. See INTM343500.