If payments of interest to foreign lenders are generally subject to withholding tax, what is the standard rate and what is the minimum rate possible under double taxation treaties?

Lending & Secured Finance

Croatia Small Flag Croatia

The standard rate of withholding tax is 15% in absence of a treaty regulating double taxation. Under the regime of most bilateral treaties the standard rate varies from 10% or 5% in order to avoid double taxation, while in some treaties withholding tax is non-existent.

Czech Republic Small Flag Czech Republic

Payments of interest to foreign lenders are not generally subject to withholding tax in Czech Republic.

Finland Small Flag Finland

As mentioned above, interest payments to non-Finnish tax residents are generally exempt from withholding tax. However, if the identity of the recipient cannot be established, and interest payment therefore would be subject to withholding tax, the applicable standard rate is 20% for corporate entities and 30% for individuals.

Germany Small Flag Germany

Please see above.

Spain Small Flag Spain

As we have already stated in the previous point, the standard withholding tax rate is 19%, although domestic regulation and some double taxation treaties entered into by Spain reduce it up to 0%, provided that the legally established requirements are fulfilled.

Philippines Small Flag Philippines

The standard tax rates on interest payment are discussed in item 15. However, tax on interest income received by nonresident alien individuals and nonresident foreign corporations may be reduced by application of tax treaties for avoidance of double taxation. Preferential tax rates on interest payment range between 10 % to 15%.

Sweden Small Flag Sweden

Please refer to question 15.

Turkey Small Flag Turkey

Please refer to our response to Question 15.

United States Small Flag United States

The standard rate for FDAP withholding is 30%. A double income tax treaty may reduce that rate, and some treaties provide for a zero-percent rate. FATCA withholding is also 30%. FDAP and FATCA will not both be imposed—the highest withholding rate is 30%.

Switzerland Small Flag Switzerland

Should Swiss withholding tax be due on interest payments (see question 15 above), the current rate is 35% (or 53.8% if grossed up). The Swiss withholding tax can be recovered (with some delay only) by Swiss lenders and by lenders that (i) are located in a jurisdiction that has as favorable double tax treaty in place with Switzerland (providing for a zero rate) and (ii) are qualifying to benefit from treaty protection. Thus, not all lenders are able to recover the Swiss withholding tax and even lenders that are able to do so will be refunded potentially only with a delay.

United Kingdom Small Flag United Kingdom

Where interest payments are required to be made subject to deduction of UK income tax, the person by or through whom the interest payment is made is required to withhold or deduct from that payment a sum representing UK income tax at the basic rate (currently 20%) and to account for the same to the UK tax authorities.

The UK has an extensive network of double taxation treaties many of which make provision for full exemption from tax imposed by the UK on interest.

Jersey Small Flag Jersey

This is not applicable.

Hong Kong Small Flag Hong Kong

Not applicable.

Austria Small Flag Austria

Please see question 15.

Mexico Small Flag Mexico

Mexico is a signatory to a number of double taxation treaties. The standard rate for foreign lenders that are financial institutions is 4.9%. However, treaty-based rates range from 4.9% to 40%, depending on the double taxation treaty and whether Mexican tax law treats a specific jurisdiction as a tax heaven.

Bosnia & Herzegovina Small Flag Bosnia & Herzegovina

The standard rate is 10% and may range from 0-10% depending on the Double Taxation Treaty. BH is a member of several Double Taxation Treaties, which are available at Agreements on avoidance of double taxation (English).

Updated: June 6, 2019