Treaty detail
United Kingdom - Canada tax treaty
A practical treaty page built around the official treaty text, key withholding categories, permanent-establishment rules, and article-level summaries.
Signed
1978-09-08
Effective
1980-01-01
Articles seeded
6
Withholding snapshot
Dividends
Individual rate: 15% · Corporate rate: 5%
The lower 5 percent corporate rate generally depends on a direct-ownership threshold under the treaty as amended. Pension funds may obtain further reductions under the protocol structure.
Interest
Rate: 10%
The 10 percent general ceiling reflects the treaty as amended. Certain government, central-bank, and arm's-length unrelated-party interest can obtain zero treatment under the protocol structure.
Royalties
Rate: 10%
The treaty generally allows source-country royalty withholding up to 10 percent, with reductions and exemptions available for specified categories such as computer software and certain copyright royalties.
Permanent establishment
Construction threshold: more than 12 months
Dependent-agent analysis remains important where a person habitually concludes contracts on behalf of the enterprise under the treaty wording as amended.
Other treaty flags
Pension treatment is article-specific. The treaty includes detailed pension and government-service articles distinct from the general dividend-interest-royalty snapshot.
Seeded article summaries
Article 4
Residence
Defines treaty residence and provides tie-breaker tests for dual residents.
Article 4 of the UK-Canada treaty has been amended several times by protocol, and modern interpretation reflects the later protocols rather than the 1978 wording alone.
Article 5
Permanent Establishment
Sets the business-presence threshold with a 12-month construction rule.
The treaty uses the classic 12-month construction-site threshold for building sites and installation projects. Agency-related PE analysis continues to depend on the treaty wording as amended.
Article 7
Business Profits
Generally reserves business profits to the residence state in the absence of a permanent establishment.
Article 7 is the operating rule for cross-border services between the UK and Canada. The article has been refined by protocol to align more closely with the OECD approach to profit attribution.
Article 10
Dividends
Caps source-country withholding on dividends at treaty rates that vary with shareholding.
Article 10 produces the 15 percent portfolio rate and the lower 5 percent direct-investment rate after the later protocols. Pension funds may obtain further reductions in qualifying cases.
Article 11
Interest
Limits source-country withholding on interest with reductions for arm's-length and government interest.
Article 11 produces the 10 percent general ceiling but allows zero treatment for arm's-length unrelated-party interest and for government and central-bank interest in qualifying cases.
Article 12
Royalties
Limits source-country royalty withholding to a 10 percent ceiling with category exceptions.
Article 12 caps royalties at 10 percent but provides exemptions for certain computer-software and copyright categories. Category-by-category analysis is important to determine the correct outcome.
Official text
Other treaties involving these jurisdictions
Computed from the cross-reference graph. Links open the related entity on this site.
This entry cites
- TreatyUS–GB treaty
- TreatyUS–CA treaty
- TreatyGB–AU treaty
- TreatyGB–DE treaty
- TreatyGB–FR treaty
- TreatyGB–JP treaty
- TreatyGB–IE treaty
- TreatyGB–NL treaty
Primary sources
- HMRC: Canada tax treatiesVerified 2026-05-20
- Canada Department of Finance: tax treatiesVerified 2026-05-20
- OECD MLI matching databaseVerified 2026-05-20
Important disclaimer
This library is for general tax education only. Always verify filing obligations, due dates, and tax consequences against the cited primary source or with a qualified tax professional.