Glossary · UK

What is Double Taxation Agreement?

A treaty between two countries that prevents the same income or gains being taxed twice and sets out which country has taxing rights.

Full Definition

A Double Taxation Agreement (DTA), also called a double taxation treaty, is a bilateral agreement between the UK and another country designed to stop the same income or gains being taxed in full by both jurisdictions. The UK has a large network of such treaties. Each DTA allocates taxing rights between the two countries for different types of income - for example employment earnings, pensions, dividends, interest, royalties and property income - and often reduces or removes withholding taxes at source. Where both countries can still tax an item, relief is given either by exemption or, more commonly, by foreign tax credit relief, so tax paid abroad is set against the UK liability on the same income. DTAs matter for cross-border workers, expatriates, overseas landlords and anyone with foreign investments, as they can significantly lower an overall tax bill and clarify residence tie-breaks. Claims are usually made through Self Assessment or specific HMRC forms, supported by evidence of the foreign tax paid.