§ Mr. Brandon-Bravoasked the Chancellor of the Exchequer if any special arrangements have been made for the taxation of the profits arising from the operation of the Channel fixed link.
§ Mr. Norman LamontAgreement has been reached at official level between the two Governments that the United Kingdom and French concessionaires should each be liable to tax on its share of the profits only in the country in which it is resident. This means that the United Kingdom concessionaire will be exempt from French tax on the profits arising to it from the operation of the link, in much the same way as United Kingdom shipping companies and airlines are exempt from French tax under the United Kingdom/France double taxation convention. A provision to this effect will be included in a protocol to the convention, subject to parliamentary approval in the two countries.
Among other provisions to be included in this protocol are two which may he relevant to the link. Interest, which is ordinarily subject to a maximum withholding rate of 10 per cent. under the existing convention, will in general be exempted from tax in the country from which it is paid; and approved pension funds will become entitled to relief under the convention on their investment income.