The Protocol to the UK/Israel DTC will
facilitate investment in Israel by UK companies in a
number of ways, including a reduction in the rates of
Israeli tax payable on dividends paid from Israeli
companies to the UK. Israeli investors into the UK will
benefit from the same reductions on UK tax.
It also introduces modern anti-avoidance provisions
that ensure only those companies engaged in genuine
business activity can benefit from the treaty, and
allows for the exchange of information between the UK
and Israel.
Financial Secretary to the Treasury said:
This agreement will facilitate UK investment into
Israel by removing tax barriers to cross-border
trade. It will also provide important protections
against those who seek to use the treaty for tax
avoidance purposes.
I’m delighted to sign this deal with such a close
ally, and pleased we now have a treaty that reflects
the latest international standards. It is a sign of
the continued excellent cooperation between our two
countries.
Trade in goods between Israel and the UK exceeded $7
billion in 2017.
The UK is the dominant destination for Israeli
investment in Europe, with twenty-nine Israeli
companies currently listed on the London Stock Exchange
(LSE).
The UK’s leading exports to Israel are machinery and
electrical equipment, while pharmaceuticals account for
more than 70 per cent of Israeli exports to the UK. An
estimated one in six of the medication used by the NHS
comes from Israel.
With Israel’s strong GDP growth, low
inflation and falling unemployment rate, it continues
to be a growing market for UK companies. Israel has an
excellent reputation for innovation and invention and
is a world centre for R&D. HRH the Duke of
Cambridge will be visiting Israel in the summer,
promoting diplomatic and cultural ties in the region.
The new Protocol provides UK companies with reduced
rates of Israeli tax on dividends, interest and no
Israeli tax on royalties, while UK Pension Schemes will
suffer no Israeli tax on payments of dividends and
interest.
It also implements standards agreed as per the OECD/G20
The signature of this agreement follows the signing of
a separate Protocol to the UK’s DTC with
Cyprus.
Former government staff, including ex-servicemen and
women, drawing a pension in Cyprus were due to pay
higher rates of tax from this year, under an agreement
signed last March.
Treasury ministers agreed in December to a five-year
delay to the tax changes after listening to the
concerns of those affected.
Mr Stride said of the Cyprus Protocol:
This agreement is great news for many of our highly
valued ex-servicemen and women in Cyprus, who would
otherwise have faced a big tax rise this year. I was
determined to do the right thing by them.
This Protocol addressed concerns about how
the DTC would
apply to some individuals and so allows individuals to
choose which basis of taxation they want to apply to
their government service pensions.
