RBS 2012 Annual Report Download - page 526

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Shareholder information continued
Taxation for US Holders continued
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 to be included in
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 converted into US dollars after the date of receipt, the
US Holder may have foreign currency gain or loss.
Taxation of capital gains
A US 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, 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 branch or agency and, in each case, such ordinary 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.
A US Holder will, upon the sale or other disposition of an ordinary share,
an ordinary ADS or a preference ADS, or upon the redemption of
preference ADS, generally recognise capital gain or loss for US federal
income tax purposes (assuming that in the case of a redemption of 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. The deductibility of
capital losses is subject to limitations.
A US Holder who is liable for both UK and US tax on a gain recognised
on the disposal of an ordinary share, an ordinary ADS or a preference
ADS may 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 Tax Treaty in the following
paragraph, ordinary 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,
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, 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, 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 (otherwise than to the custodian on
cancellation of the ADS) or of transferring an ordinary share. A transfer of
an ADS executed and retained in the United States will not give rise to
stamp duty and an agreement to transfer an ADS will not give rise to
SDRT. Stamp duty or SDRT will normally be payable on or in respect of
transfers of ordinary shares and accordingly any holder who acquires or
intends to acquire ordinary shares is advised to consult their own tax
advisers in relation to stamp duty and SDRT.