RBS 2010 Annual Report Download - page 433

Dividends will be included in a US Holder's income on the date of the US
Holder's (or in the case of ADSs, the depositary's) receipt of the dividend.
The amount of any dividend paid in pounds sterling or euros to be taken
into income by a US Holder will be the US dollar amount calculated by
reference to the relevant exchange rate in effect on the date of such
receipt regardless of whether the payment is in fact converted into US
dollars. If the dividend is converted into US dollars on the date of receipt,
the US Holder generally should not be required to recognise foreign
currency gain or loss in respect of the dividend income. If the amount of
such dividend is not converted into US dollars on the date of receipt, the
US Holder may have foreign currency gain or loss.
Taxation of capital gains
AUS Holder that is not resident (or, in the case of an individual, ordinarily
resident) in the UK will not normally be liable for UK tax on capital gains
realised on the disposition of an ordinary share, a non-cumulative dollar
preference share, an ordinary ADS or a preference ADS unless at the
time of the disposal, in the case of a corporate US Holder, such US
Holder carries on a trade in the UK through a permanent establishment or,
in the case of any other US Holder, such US Holder carries on a trade,
profession or vocation in the UK through a UK branch or agency and, in
each case, such ordinary share, non-cumulative dollar preference share,
ordinary ADS or preference ADS is or has been used, held or acquired by
or for the purposes of such trade (or profession or vocation), carried on
through such permanent establishment, branch or agency. Special rules
apply to individuals who are temporarily not resident or ordinarily resident
in the UK.
AUS Holder will, upon the sale or other disposition of an ordinary share,
anon-cumulative dollar preference share, an ordinary ADS or a
preference ADS, or upon the redemption of a non-cumulative dollar
preference share or preference ADS, generally recognise capital gain or
loss for US federal income tax purposes (assuming that in the case of a
redemption of a non-cumulative dollar preference share or a preference
ADS, such US Holder does not own, and is not deemed to own, any
ordinary shares or ordinary ADSs of the company) in an amount equal to
the difference between the amount realised (excluding in the case of a
redemption any amount treated as a dividend for US federal income tax
purposes, which will be taxed accordingly) and the US Holder's tax basis
in such share or ADS. This capital gain or loss will be long-term capital
gain or loss if the US Holder held the share or ADS so sold, disposed or
redeemed for more than one year.
AUS Holder who is liable for both UK and US tax on a gain recognised
on the disposal of an ordinary share, a non-cumulative dollar preference
share, an ordinary ADS or a preference ADS will generally be entitled,
subject to certain limitations, to credit the UK tax against its US federal
income tax liability in respect of such gain.
Estate and gift tax
Subject to the discussion of the Estate TaxTreaty in the following
paragraph, ordinary shares, non-cumulative dollar preference shares,
ordinary ADSs or preference ADSs beneficially owned by an individual
may be subject to UK inheritance tax (subject to exemptions and reliefs)
on the death of the individual or in certain circumstances, if such shares
or ADSs are the subject of a gift (including a transfer at less than market
value) by such individual. Inheritance tax is not generally chargeable on
gifts to individuals made more than seven years before the death of the
donor. Ordinary shares, non-cumulative dollar preference shares,
ordinary ADSs or preference ADSs held by the trustees of a settlement
may also be subject to UK inheritance tax. Special rules apply to such
settlements.
An ordinary share, a non-cumulative dollar preference share, an ordinary
ADS or a preference ADS beneficially owned by an individual, whose
domicile is determined to be the United States for 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 such
share or ADS, except in certain cases where the share or ADS (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
ordinary share, non-cumulative dollar preference share, ordinary ADS or
preference ADS is subject to both UK inheritance tax and US federal
estate or gift tax.
UK stamp duty and stamp duty reserve tax (SDRT)
The following is a summary of the UK stamp duty and SDRT
consequences of transferring an ADS or ADR in registered form
(otherwise than to the custodian on cancellation of the ADS) or of
transferring an ordinary share or a non-cumulative dollar preference
share. A transfer of a registered ADS or ADR executed and retained in
the United States will not give rise to stamp duty and an agreement to
transfer a registered ADS or ADR will not give rise to SDRT. Stamp duty
or SDRT will normally be payable on or in respect of transfers of ordinary
shares or non-cumulative dollar preference shares and accordingly any
holder who acquires or intends to acquire ordinary shares or non-
cumulative dollar preference shares is advised to consult its own tax
advisers in relation to stamp duty and SDRT.
431RBS Group 2010
Shareholder information