RBS 2006 Annual Report Download - page 260
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RBS Group • Annual Report and Accounts 2006
Shareholder information
Interest on the PROs constitutes UK source income for UK tax
purposes and, as such, may be subject to income tax by
direct assessment even where paid without withholding.
However, interest with a UK source received without deduction
or withholding on account of UK tax will not be chargeable to
UK tax in the hands of a US Holder unless, in the case of a
corporate US Holder, such US Holder carries on a trade in the
UK through a UK permanent establishment or in the case of
other US Holders, such persons carry on a trade, profession or
vocation in the UK through a UK branch or agency in
connection with which the interest is received or to which the
PROs are attributable. There are exemptions for interest
received by certain categories of agents (such as some
brokers and investment managers).
EU Directive on taxation of savings income
The European Union has adopted a directive regarding the
taxation of savings income. The Directive requires member
states of the European Union to provide to the tax authorities of
other member states details of payments of interest and other
similar income paid by a person to an individual resident in
another member state, except that Belgium, Luxembourg and
Austria are instead imposing a withholding system for a
transitional period unless during such period they elect
otherwise.
Disposal (including redemption)
A disposal (including redemption) of PROs by a non-corporate
US Holder will not give rise to any liability to UK taxation on capital
gains unless the US Holder carries on a trade (which for this
purpose includes a profession or a vocation) in the UK through
a branch or agency and the PROs are, or have been, held or
acquired for the purposes of that trade, branch or agency.
A transfer of PROs by a US Holder will not give rise to a charge
to UK tax on accrued but unpaid interest payments, unless the
US Holder is an individual or other non-corporate taxpayer and
at any time in the relevant year of assessment or accounting
period carries on a trade in the UK through a branch or agency
to which the PROs are attributable.
Annual tax charges
Corporate US Holders of PROs may be subject to annual UK
tax charges (or relief) by reference to fluctuations in exchange
rates and in respect of profits, gains and losses arising from
the PROs, but only if such corporate US Holders carry on a
trade, profession or vocation in the UK through a UK permanent
establishment to which the PROs are attributable.
Inheritance tax
In relation to PROs held through DTC (or any other clearing
system), the UK inheritance tax position is not free from doubt
in respect of a lifetime transfer, or death of, a US Holder who
is not domiciled nor deemed to be domiciled in the UK for
inheritance tax purposes; HM Revenue & Customs is known to
consider that the situs of securities held in this manner is not
necessarily determined by the place where the securities are
registered. In appropriate circumstances, there may be a
charge to UK inheritance tax as a result of a lifetime transfer at
less than market value by, or on the death of, such US Holder.
Inheritance tax is not generally chargeable on gifts to
individuals made more than seven years before the death of
the donor. However, exemption from, or a reduction of, any
such UK tax liability may be available under the Estate Tax
Treaty (see below). US Holders should consult their
professional advisers in relation to such potential liability.
PROs beneficially owned by an individual, whose domicile is
determined to be the United States for the purposes of the
Estate Tax Treaty and who is not a national of the UK, will not
be subject to UK inheritance tax on the individual’s death or on
a lifetime transfer of the PRO, except in certain cases where
the PRO (i) is comprised in a settlement (unless, at the time of
the settlement, the settlor was domiciled in the United States
and was not a national of the UK); (ii) is part of the business
property of a UK permanent establishment of an enterprise; or
(iii) pertains to a UK fixed base of an individual used for the
performance of independent personal services. The Estate Tax
Treaty generally provides a credit against US federal estate or
gift tax liability for the amount of any tax paid in the UK in a
case where the PRO is subject to both UK inheritance tax and
US federal estate or gift tax.
Stamp duty and SDRT
No stamp duty, SDRT or similar tax is imposed in the UK on the
issue, transfer or redemption of the PROs.
Exchange controls
The company has been advised that there are currently no UK
laws, decrees or regulations which would prevent the import or
export of capital, including the availability of cash or cash
equivalents for use by the Group, or the remittance of dividends
or other payments to non-UK resident holders of the company’s
non-cumulative dollar preference shares.
There are no restrictions under the articles of association of
the company or under UK law, as currently in effect, which limit
the right of non-UK resident owners to hold or, when entitled to
vote, freely to vote the company’s non-cumulative dollar
preference shares.
Memorandum and articles of association
The company’s Memorandum of Association and Articles of
Association as in effect at the date of this annual report are
registered with the Registrar of Companies of Scotland. The
Articles of Association were last amended on 29 April 2004
and have been filed with the SEC.
Documents on display
Documents concerning the company may be inspected at
36 St Andrew Square, Edinburgh, EH2 2YB.
Executive directors’ service contracts and copies of directors’
indemnities granted by the company in terms of section 309C
of the Companies Act 1985 may be inspected at the
company’s office at Gogarburn, Edinburgh, EH12 1HQ
(telephone 0131 626 4114).