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From 6 April 2008, all UK resident individuals and non-resident
Commonwealth and European Economic Area (EEA) nationals will be entitled to
notional tax credit on dividends received from non-UK resident companies.
This will bring the taxation of these dividends into line with dividends
received from UK resident companies, with an effective tax rate of 0% or
25%, depending on whether the individual is a basic or higher rate taxpayer.
In 2008/09 this notional tax credit will only be available for small
investors, who have less than a 10% holding in the company paying the
dividend. This will be extended to all investors from 6 April 2009, subject
to the condition that the source country levies a charge similar to UK
corporation tax on the corporate profits of the company. Anti-avoidance
measures will be put into place to ensure this is not abused.
Our view
This will put investors in foreign companies in a similar position to
investors in UK companies, removing a distinction that may be
discriminatory under EU Law. |
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