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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 ( 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.

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© Crown Copyright 2008.

A licence is need to reproduce this article and has been republished for educational / informational purposes only. Article reproduced by permission of HM Revenue & Customs under the terms of a Click-Use Licence. Tax briefs are updated regularly and may be out of date at time of reading.

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Article Published/Sorted/Amended on Scopulus 2008-04-08 10:01:19 in Tax Articles

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