[INTM413230] Transfer pricing: the main thin capitalisation legislation: The interaction between UK taxing rights and double taxation agreements
The relationship between UK taxing rights and tax treaty benefits
Where UK-source interest is paid to a person taxable in another state, the same income might be taxable both in the source state (the UK) and in the recipient's country. If the person subject to double taxation (the recipient of the interest) makes a certified application to HMRC's treaty team, fulfilling the relevant requirements, the double taxation can be reduced or eliminated to the extent that the relevant double taxation agreement (DTA) and domestic legislation allows. This is achieved by the source state yielding some or all of its taxing rights.