Directors UK does not make any tax deductions from either UK or foreign distributions.
However, some of our foreign distribution funds have been subject to deduction of overseas withholding tax prior to receipt by Directors UK.
It is our understanding that, in a small number of cases, it may be possible for non-UK tax resident members who have received foreign distributions sourced from certain territories to claim tax relief for the withholding tax deducted at source in their country of tax residence.
Some foreign societies are obliged under their local tax legislation to deduct withholding tax from payments made to Directors UK. Where applicable, these deductions fall into two categories:
1. In most cases, under the overseas tax rules, Directors UK is regarded as being the ‘beneficial owner’ of the underlying copyright, and hence the entity which suffers the tax deductions. In these cases, it is our understanding that our members to whom we make the onward distributions will not be eligible to claim tax relief.
2. Payments to Directors UK by the following societies are based on allocations to individual Directors UK members:- DAMA (Spain), DHFR (Croatia), SIAE (Italy). Under their respective local tax rules, the individual Directors UK members are regarded as the ‘beneficial owner’ of the underlying copyright. Consequently, allocations to Directors UK members whose tax residence is outside of the UK will be subject to deduction of withholding tax by these societies. We understand that following onward distribution by Directors UK, these members should be entitled to claim tax relief on the tax that has been deducted from the payments from the above societies when submitting a tax return in their country of tax residence. If making such a claim, they will probably be required to obtain a certificate of tax deducted from the relevant society (this cannot be provided by Directors UK).
All Directors UK distributions relate to royalties from audio-visual rights which, under UK income tax legislation, fall within the classification of royalties relating to intellectual property (copyright).
Normally, copyright royalties are subject to a 20% withholding tax deduction when paid to non-UK residents (subject to relevant double tax treaty provisions).
However, copyright in cinematographic film or video recording is specifically exempted from the definition of intellectual property, and hence our UK distributions are not subject to deduction of UK tax.
Disclaimer: This overview is based on expert advice received by Directors UK. It is provided for information only and we do not accept liability for the content. Individuals should always refer to the relevant tax regulations and seek advice from their professional advisors.