Request form for non-deduction of tax at source in the UK

The tax treaty between the UK and Israel dictates the tax payment or tax deduction at source for income related to both countries. For example, the tax deduction at source for royalties that must be paid by a non-resident of the UK is 20%. However, according to the tax treaty between Israel and the UK, an Israeli resident will not need to pay any tax deduction at source at all for his royalties’ income.

To receive the relevant tax reliefs, one must complete the Form DT-Individual – Double Taxation Treaty Relief and submit it to the British tax authority.

This form allows individuals, who are residents of countries with which the UK has signed a treaty to prevent double taxation, to request tax relief or withholding tax deductions established in the treaty for incomes from pensions, certain annuities, interest, or royalties originating from the UK.

The form is lengthy and contains many sections. Some of these sections are not relevant to every form filler, so it is important to ensure that all required sections are completed.

In this article, we will address some of the parts that make up the form:

Part A: Filling in Personal Details and Establishing Residency

This section includes filling in personal details of the applicant and, if applicable, a representative. Additionally, in this section, a signature from the tax authority of the resident country is required to confirm that the applicant is indeed a resident. If the tax authority refuses to sign the form, a residency certificate can be attached instead.

Part B: Details about Residency for Tax Purposes and Activities in the UK

In this section, the applicant must provide details related to their tax residency status, such as whether they have been a resident of the country all along or alternatively, from when they are considered a resident for tax purposes of that country. The applicant must also fill in details related to their activities and income in the UK. These details include specifying and detailing their trade or business in the UK, if any, the tax benefits they receive for their UK income from their country of residency, if any, etc. It’s important to note that some treaties require that the individual be taxed in their country of residency before they can receive tax relief in the UK. This section distinguishes between residents of Bahrain, the British Virgin Islands, the Cayman Islands, Hong Kong, Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates and residents of other countries with which the UK has a treaty. Residents of these countries need to provide slightly different details to the British tax authority – HMRC. These details include, addressing the type of residency in Saudi Arabia and the UAE, explaining why the individual is considered a resident of the country, and referring to concepts such as permanent establishment, center of vital interests, etc., for Bahrain, Hong Kong, Kuwait, and Qatar, and distinguishing for which pensions tax relief can be obtained for the Virgin Islands and Cayman Islands.

Part C: The Income for Which the Application Is Submitted

This part includes sections for each type of income covered under this form, and the applicant needs to fill in the relevant section for them. The details required from the applicant include the source of income, amount of income, etc. It is important to attach supporting documents to the application form that corroborate the information mentioned in this section. For example, for income from interest, loan agreements should be attached; for income from royalties, royalty agreements should be attached, etc.

Part D: Tax Paid in the UK

If tax has already been paid in the UK for the income in question and a refund is requested, this part should be filled in with details about the source of income, the date of income, the amount of income, and the tax deducted.

Note:

• There is no need to attach tax receipts to the application form, but they should be kept in case they are needed to support the claim.
• If the request for relief from withholding tax is approved, it is important to update the British tax authority if there are changes in the details provided in the form.
• If the form submitter requests a refund, they can calculate the amount of the refund themselves, by calculating how much was actually paid versus how much should have been paid according to the treaty. The British tax authority can calculate this themselves if the form submitter does not wish to.

Our office handles approvals for withholding tax, reducing withholding, and requesting tax benefits, and assists in filling out the relevant forms.