The Double Taxation Agreement between Barbados and the United Kingdom entered into force on 19 December 2012 which was signed in Barbados on 26 April 2012.
The Double Taxation Agreement generally follows the provisions of the OECD Model; however under the agreement a permanent establishment arises where a building site or construction project continues for more than nine months. For the purposes of the Convention a pension scheme established in a contracting state is considered to be a resident of that state.
Under the Convention interest and royalties are taxable only in the state of residence of the beneficial owner. Withholding tax on dividends is generally zero, but where the dividends are paid out of income derived from immovable property by an investment vehicle that distributes most of its income annually, and where the income is not subject to tax, the maximum withholding tax rate is 15%. This provision does not however apply where the beneficial owner of the dividends is a pension scheme.
The provisions of the agreement are effective in Barbados from 1 January 2013 and in the UK from 1 April 2013 for Corporation Tax and 6 April 2013 for Income Tax and Capital Gains Tax.
