This browser is not actively supported anymore. For the best passle experience, we strongly recommend you upgrade your browser.

Welcome to the European Tax Blog.

Some of Europe's brightest legal minds look at the tax issues across Europe which could impact multinational businesses.

| 1 minute read

The ORIP rules: intangible property held in the Crown Dependencies

It may be tempting to think that, following the renegotiation of the double tax treaties (DTTs) between the UK and the Crown Dependencies (Guernsey, the Isle of Man and Jersey), entities resident in one of them would fall outside the scope of the UK's rules taxing offshore receipts in respect of intangible property (ORIP). Unfortunately, this is not the case. 

Application of the ORIP regime

The ORIP regime does not apply to an entity, if it is resident in a ‘full treaty territory’, being a territory that has a DTT with the UK which contains a non-discrimination provision. 

Paragraph 7.3 of the updated draft technical guidance published in October 2019 confirms that the UK's tax authorities consider that the UK's DTTs with the Crown Dependencies (as well as certain other territories and countries) do not contain a relevant non-discrimination provision. This view may seem surprising, given that the renegotiated DTTs do include non-discrimination provisions. In fact, it was questioned by a member of the UK's Parliament.

The issue is that the ORIP regime defines a non-discrimination provision by reference to nationals of a ‘state’. Therefore, a ‘full treaty territory’ for the purposes of the ORIP rules can only be a ‘state’ - and the Crown Dependencies cannot meet this requirement because, under international law, they are not recognised as sovereign states in their own right.

This means that, despite the renegotiation of the relevant DTTs, the ORIP regime may apply to entities resident in one of the Crown Dependencies.

Relief under the applicable DTT

Fortunately, this may not be the end of the matter. It is possible that, if an entity located in a Crown Dependency is subject to an ORIP charge, relief may be available under the applicable renegotiated DTT. 

Whilst the availability of treaty relief would lessen the impact of an ORIP charge, additional analysis will be required. Multinational groups that hold valuable intangible property in the Crown Dependencies (where UK sales could relate to such intangible property) should carefully consider the implications of the ORIP rules and the availability of any treaty relief in respect of potential charges under these rules.


tmcgrath, slaughterandmay, double taxation treaty, royalties, crown dependencies