HM Revenue and Customs Brief 21/08
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Issued 7 April 2008
Eurobonds and deduction of tax
This Revenue and Customs Brief is to clarify how Eurobonds qualify for the
Eurobond exemption from the obligation to deduct tax from yearly interest. All
references are to the Income Tax Act 2007 unless otherwise specified.
There is an obligation on a company to deduct tax under section 874 on yearly
interest. The Eurobond exemption is in section 882 and removes the obligation to
deduct tax in respect of a payment of yearly interest on a quoted Eurobond.
Quoted Eurobond is defined in section 987 as an interest-bearing security that
is issued by a company and is listed on a recognised stock exchange. The meaning
of listed on a recognised stock exchange is in section 1005 and requires that
the securities are admitted to trading on that exchange and are included in the
official list.
Therefore, to qualify for the Eurobond exemption, the Eurobond must at the
date of payment of the interest be listed on a recognised stock exchange and be
admitted to trading on that exchange. Where a Eurobond is included in the
official UK list or officially listed overseas on an exchange that has been
designated by us as a recognised stock exchange, that Eurobond will be regarded
as meeting our definition of ‘listed’ on a recognised stock exchange having met
that exchange’s rules for trading.
Companies considering applying for a listing or currently undertaking the
application process should, before making the first payment of interest on the
Eurobond, ensure that the Eurobond is listed and admitted to trading. Applying
for a listing is not sufficient to meet the Eurobond exemption. A list of
recognised stock exchanges (http://www.hmrc.gov.uk/fid/rse.htm) is available on
our website. We expect the companies relying on the Eurobond exemption to ensure
the requirements for the exemption are met before paying interest on the
Eurobond. This guidance will be incorporated into the Company Taxation Manual.
© Crown Copyright 2008.
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