Contributed By Travers Smith LLP
The UK has one of the world's largest networks of double tax treaties. Whether or not a fund itself can benefit from protection against taxation under the terms of a treaty will depend on various factors, including the terms of the treaty itself and the particular circumstances of the fund. Tax opaque funds may be able to benefit from this protection (for example, an ITC may be able to rely on the terms of a double tax treaty to reduce or eliminate overseas withholding tax which would otherwise apply to dividends or interest it receives).
In relation to certain tax transparent funds, it may be possible for investors to benefit from treaty protection in relation to amounts received by the fund. Whether this protection is available will depend on a number of factors, including, the terms of the relevant treaty and the particular circumstances of the fund and relevant investor.
Generally, the UK does not tax non-resident investors on gains made from investments in UK funds or dividends received from these funds, other than in certain circumstances where the fund invests in UK real estate. In cases where the UK does potentially tax non-resident investors, it may be possible for an investor to rely on the provisions of a double tax treaty to reduce or eliminate this taxation, for example, in relation to withholding tax on a PID paid by a REIT. Whether or not relief is available will depend on a number of factors, including, the terms of the relevant treaty and the particular circumstances of the relevant investor.