United Kingdom / Israel · Article vi · United Kingdom–Israel 1962 Convention: official amended publication

- (1) Dividends paid by a company which is a resident of one of the territories to a resident of the other territory may be taxed in that other territory.

- (2) However, dividends paid by a company which is a resident of one of the territories may also be taxed in that territory according to the laws of that territory, but if the beneficial owner of the dividends is a resident of the other territory, the tax so charged shall not exceed:

- (a) 5 per cent of the gross amount of the dividends if the beneficial owner of the dividends is a company (other than a partnership or a real estate investment trust) which holds directly at least 10 per cent of the capital of the company paying the dividends throughout a 365 day period that includes the day of payment of the dividends (for the purpose of computing that period, no account shall be taken of changes of ownership that would directly result from a corporate reorganisation, such as a merger or divisive reorganisation, of the company that holds the shares or that pays the dividends);

- (b) 15 per cent of the gross amount of the dividends in all other cases.

- (3) Notwithstanding the provisions of paragraph (2) of this Article, dividends arising in one of the territories and beneficially owned by a pension scheme that is a resident of the other territory shall be exempt from tax in the first mentioned territory.

- (4) Notwithstanding the previous provisions of this Article,

- (a) distributions made by a real estate investment trust, according to Article 64A3 of the Israeli Income Tax Ordinance, which is a resident of Israel to a resident of the United Kingdom may be taxed in the United Kingdom. However, such distributions may also be taxed in Israel and according to the laws of Israel, but if the beneficial owner of these distributions is a resident of the United Kingdom and holds directly less than 10 per cent of the capital of that real estate investment trust, the tax so charged shall not exceed 15 per cent of the gross amount of the distributions;

- (b) where dividends are paid out of income (including gains) derived directly or indirectly from immovable property within the meaning of Article IX by a real estate investment trust which is a resident of the United Kingdom and which distributes most of this income annually and whose income from such immovable property is exempted from tax, such dividends may be taxed in Israel. However, such dividends may also be taxed in the United Kingdom and according to the laws of the United Kingdom, but if the beneficial owner of these dividends is a resident of Israel, the tax so charged shall not exceed 15 per cent of the gross amount of the dividends. For the purposes of this subparagraph, a real estate investment trust means an investment vehicle within the meaning of Part 12 of Corporation Tax Act 2010 or a property authorised investment fund within the meaning of Part 4A of the Authorised Investment Funds (Tax) Regulations 2006 (SI 2006/964).

- (5) Paragraphs (2), (3) and (4) of this Article shall not affect the taxation of the company in respect of the profits out of which the dividends are paid or distributions are made.

- (6)The term ‘dividends’ as used in this Article means income from shares, or other rights, not being debt-claims, participating in profits, as well as any other item which is subjected to the same taxation treatment as income from shares by the laws of the territory of which the company making the distribution is a resident.

- (7) The provisions of paragraphs (1), (2), (3) and (4) of this Article shall not apply if the beneficial owner of the dividends or of the distributions by a real estate investment company, being a resident of a territory, carries on business in the other territory of which the company paying the dividends or making the distributions is a resident, through a permanent establishment situated therein and the holding in respect of which the dividends or distributions are paid is effectively connected with such permanent establishment. In such case the provisions of Article III shall apply.

- (8) Where a company which is a resident of a territory derives profits or income from the other territory, that other territory may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other territory or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment situated in that other territory, nor subject the company’s undistributed profits to a tax on the company’s undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other territory.

- This paragraph shall apply also to distributions made by a real estate investment company.

Source & edition

HMRC, 1962 UK-Israel Double Taxation Convention as amended by the 1970 and 2019 Protocols

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HMRC official amended text incorporating the 1970 and 2019 Protocols; English publication only; no current-law certification

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English

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Signature

1962-09-26

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