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Hong Kong; United Kingdom

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Treaty between Hong Kong and United Kingdom – details

Details of the income and capital gains tax treaty and protocol between Hong Kong and United Kingdom, signed on 21 June 2010, have become available. The treaty was concluded in the English language and generally follows the OECD Model Convention.

The maximum rates of withholding tax are:

-   0% on dividends; 15% on dividends paid out of the Uinted Kingdom by real estate investment trusts;
-   0% on interest, except where the anti-treaty shopping provisions in the treaty apply; and
-   3% on royalties.

Deviations from the OECD Model include that:

-   A building site, a construction, assembly or installation project or supervisory activities in connection therewith, constitute a permanent establishment only if such site, project or activities last more than six months (Art. 5(3)).
-   An enterprise furnishing services (including consultancy services) in other contracting party is deemed to have a PE if the services are provided for a period or periods exceeding 183 days in any 12-month period, and these services are performed directly or through employees or other personnel engaged by the enterprise for such purpose, in connection with a site, a project or supervisory activities (Art. 5(4)).

Hong Kong and United Kingdom apply the credit method for the avoidance of double taxation. Dividends received from a resident of Hong Kong by a resident company in the United Kingdom are exempt only to the extent that the conditions for exemption under the law of the United Kingdom are met.

The protocol specifically provides that there will be no automatic or spontaneous exchange of information.

Upon entry into force of this treaty, the transport treaty between Hong Kong and the United Kingdom, which was signed on 25 October 2000, will be terminated.

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