[INTM413220] Transfer pricing: the main thin capitalisation legislation: Consequences of failing to deduct withholding tax
The withholding tax regime and treaty clearances
INTM413210 outlined the ITA07/S874‘withholding tax’ implications of paying yearly interest overseas, and how a valid application by an overseas lender under the relevant double taxation agreement would affect that obligation.
An application by the overseas lender under a DTA or under the EU Interest & Royalties Directive (INTM400000), is likely to be made up of two elements, depending largely on how promptly the claim follows the making of the loan. These are: