The double tax agreement between the UK and Kosovo which was signed on 4 June 2015 entered into force on 16 December 2015. The agreement takes effect in Kosovo from 1 January 2016 and in the UK from 1 January 2016 for withholding tax; for corporation tax from 1 April 2016; and for income tax and capital gains tax from 6 April 2016. The agreement generally follows the provisions of the OECD Model.
Under the provisions of the agreement dividends are to be exempt from withholding tax in the State where the payer is resident, except where the beneficial owner of the dividends is a pension scheme established in the other contracting State, the dividends are paid from income derived directly or indirectly from immovable property by an investment vehicle that distributes most of the income annually and whose income from immovable property is exempt from tax. In that case the maximum withholding tax is 15%.
Under the treaty interest and royalties paid to a resident of the other contracting State are not subject to withholding tax in the source State.
