Exporting to India – Tax Residency Certificate

Question

We have been exporting to one Indian manufacturer for a number of years and they have now said that RBI will not process any payments from them to us until they receive a Tax Residency Certificate and Certificate of Non Residence In India. I’m hoping someone can point me in the right direction as I’ve spend quite some time trawling HMRC website without clear information.

Answer

Hi Lee,

Yes, it’s an odd one that HMRC don’t seem to publicise very well. HMRC call it a Certificate of Financial Residency. The address to get one from though is:
Business Tax Operations Unit,
CT Services S1137,
PO Box 29997,
Glasgow,
G70 5AB
Phone number 0300 200 3410
One thing that I’ve found is that the certificate is now issued on a specific date (Rather than a period of say a year) so make sure when you speak to them that you mention if it’s to cover a specific event.
Thanks,

Simon

Answer

A tax residency certificate (TRC) can be obtained by application to HM Revenue & Customs (HMRC).

However, HMRC will not issue a general certificate of UK residence. They will only issue a certificate in respect of a double tax treaty the UK holds with another jurisdiction.

For example, should you invoice an Indian customer, you will receive payment net of Indian withholding taxes. Should you wish to benefit from a reduced rate of Indian withholding taxes, in accordance with the terms of the UK/India double tax treaty, you would need to apply for a TRC confirming that your company was UK resident for the purposes of the UK/India double tax treaty.

The nature of the TRC you require, and how the application should be made, will be dependent on the other jurisdiction in question. Furthermore, the matter may be complicated if the company is trading through a Permanent Establishment in another jurisdiction, or HMRC have concerns that another jurisdiction may claim the company is a tax resident by virtue of their own domestic laws.

Further guidance on the exact particulars of a TRC application can be found on the HMRC website at http://www.hmrc.gov.uk/manuals/intmanual/intm162000.htm onwards.

Answer

Thank you both for your help. With regards to TRC it looks like it’s not as straight forward as I assumed! I have been wading through the manuals but without much luck thus far.

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