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royalties question on VAT and Corporation tax

with EU payments and outside EU income


I am just seeking clarification on the matters below. 

Corporation tax: UK company pays copyright royalties to a company in another EU company and then grants another licence to a non-EU country company. The two companies (EU and UK) are under common control by a non-UK resident director. My understanding is that the UK co. does not withold tax at 20% from what it pays the Greek co. because the double tax treaty between Greece and the UK (article VI) states that exempt from tax in the UK and tax treaties prevail over domestic law. In my opinion the anti-avoidance measure March 2016 that nullify the treaty where connected parties doesnt apply because Greece is not a tax heaven country and hence no benefit is secured by these arrangements.

VAT: the supply of royalies to the non-EU company is outisde the scope of UK VAT (general rule B2B). The buyin in of services from the Greek company is under the reverse charge mechanism for the UK company. 

many thanks for your help.



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18th Jul 2018 13:53

There is no withholding tax between group companies within EU. See below

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to GlobalTax
18th Jul 2018 14:21

thanks for your reply. this is not a group (parent - subsidiary) or an associated company in accordance with the definition in the link you kindly provided - just controlled by same director.

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18th Jul 2018 14:06

NarniaCo pays royalties to UKCo who in turn pays royalties to GreekCo. Which of these parties are connected?

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to Portia Nina Levin
18th Jul 2018 14:26

sorry there was a confusion in my original. the UK co. is under common control with the Greek co.

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