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02 December 2014
The UK tax treatment of a distribution from a Swiss company
A UK trading company holds ordinary shares in a Swiss company as an investment the holding being less than 1%.
The Swiss company is buying back a proportion of the shares and has stated that 35% withholding tax will be deducted from the consideration paid in excess of the nominal value of the shares. It has also advised that shareholders may be able to reclaim some of the tax under the UK/Swiss double tax agreement.
Several questions arise about the tax implications for the UK company.
- Is the distribution received as capital or income? Income would be preferable because a dividend would be exempt but for a corporate shareholder it appears that CTA 2009 s 931RA applies and the distribution will be treated as capital so a chargeable gain will arise.
- The UK/Swiss double tax treaty allows tax withheld to...
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