RBS 2012 Annual Report Download - page 528

Taxation for US Holders continued
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, profession or
vocation 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 tax 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 in the UK through a UK
permanent establishment to which the PROs are attributable.
Inheritance tax
In relation to PROs held through Depository Trust Company (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.
Passive Foreign Investment Company (PFIC) considerations
In general, a foreign corporation will be a PFIC for any taxable year in
which, after taking into account the income and assets of the corporation
and certain subsidiaries pursuant to applicable 'look-through rules', either
(i) at least 75% of its gross income is 'passive income' or (ii) at least 50%
of the average quarterly value of its assets is attributable to assets which
produce passive income or are held for the production of passive income.
The company does not believe that it was a PFIC for its 2012 taxable
year. Although interest income is generally passive income, a special rule
allows banks to treat their banking business income as non-passive. To
qualify for this rule, a bank must satisfy certain requirements regarding its
licensing and activities. The company's possible status as a PFIC is
determined annually, however, and may be subject to change if the
company fails to qualify under this special rule for any year in which a US
Holder holds ordinary shares, ordinary ADSs, preference ADSs or PROs.
If the company were to be treated as a PFIC for any year during which a
US Holder holds ordinary shares, ordinary ADSs, preference ADSs or
PROs, US Holders would generally be subject to adverse US federal
income tax consequences. Holders should consult their own tax advisers
as to the potential application of the PFIC rules to the ownership and
disposition of the company's ordinary shares, ordinary ADSs, preference
ADSs or PROs.
Information reporting and backup withholding
Payments on, and proceeds from the sale of, ordinary shares, ordinary
ADSs, preference ADSs or PROs that are made within the United States
or through certain U.S-related financial intermediaries may be subject to
information reporting and backup withholding unless (i) the US Holder is
an exempt recipient or (ii) in the case of backup withholding, the US
Holder provides a correct taxpayer identification number and certifies that
it is not subject to backup withholding. The amount of any backup
withholding from a payment to a US Holder will be allowed as a credit
against the US Holder’s U.S. federal income tax liability and may entitle it
to a refund, provided that the required information is timely furnished to
the Internal Revenue Service.
Foreign financial assets reporting
Certain US Holders who are individuals (and under proposed regulations,
certain entities) may be required to report information relating to the
company’s securities, subject to certain exceptions (including an
exception for securities held in accounts maintained by US financial
institutions). US Holders are urged to consult their tax advisers regarding
the application of these rules in the US Holders’ particular circumstances.
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, interest or other payments to
non-UK resident holders of the company's securities.
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 securities.
Memorandum and Articles of Association
The company's Memorandum 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 30 May 2012. Copies can be obtained from Companies House in the
UK or from the Group’s website (www.rbs.com).
Incorporation and registration
The company was incorporated and registered in Scotland under the
Companies Act 1948 as a limited company on 25 March 1968 under the
name National and Commercial Banking Group Limited, and changed its
name to The Royal Bank of Scotland Group Limited on 3 September
1979. On 10 March 1982 it was re-registered under the Companies Acts
1948 to 1980 as a public company with limited liability. The company is
registered under Company No. SC45551.
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Shareholder information continued