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HMRC have notified companies that they must ensure they are listed on the Stock Exchange before making interest payments on a eurobond.
Applying for a listing is not sufficient to meet the exemption.
There is an obligation on a company to deduct tax on yearly interest, under Income Tax Act 2007 s 874 .
The eurobond exemption is in s 882 and removes the obligation to deduct tax in respect of a payment of yearly interest on a quoted eurobond.
Quoted eurobond is defined in s 987 as an interest-bearing security that is issued by a company and is listed on a recognised stock exchange.
Therefore, to qualify for the exemption, the eurobond must, at the date of payment of the interest, be listed on a recognised stock exchange and be admitted to trading on that exchange.
Where a eurobond is included in the official UK list or officially listed overseas on an exchange that has been designated by HMRC as a recognised stock exchange, that bond will be regarded as meeting HMRC's definition of 'listed' on a recognised stock exchange having met that exchange's rules for trading.
Companies considering applying for a listing or currently undertaking the application process should, before making the first payment of interest on the eurobond, ensure that it is listed and admitted to trading.
This guidance will be incorporated into HMRC's Company Taxation Manual.
