Unilever 2003 Annual Report Download - page 163

160 Unilever Annual Report & Accounts and Form 20-F 2003
Taxation for US residents holding shares in PLC
The following notes are provided for guidance. US residents
should consult their local tax advisers, particularly in connection
with potential liability to pay US taxes on disposal, lifetime gift
or bequest of their shares.
United Kingdom taxation on dividends
Under United Kingdom law, income tax is not withheld from
dividends paid by United Kingdom companies. Shareholders,
whether resident in the United Kingdom or not, receive the full
amount of the dividend actually declared.
A shareholder resident in the United Kingdom is entitled to a tax
credit against liability for United Kingdom income tax, equal to
10% of the aggregate amount of the dividend plus tax credit
(or one-ninth of the dividend). For example, a dividend payment
of £9.00 will carry a tax credit of £1.00.
United States taxation on dividends
If you are a shareholder resident in the US, the dividend will be
ordinary dividend income. Under recently enacted legislation (The
Jobs and Growth Tax Relief Reconciliation Act of 2003 – the 2003
Act), dividends received by an individual during taxable years
before 2009 will be taxed at a maximum rate of 15%, provided
the individual has held the shares for more than 60 days during
the 120-day period beginning 60 days before the ex-dividend
date and certain other conditions are satisfied. Unilever PLC is a
qualified foreign corporation for the purposes of the 2003 Act.
Dividends received by an individual for taxable years after 2008
will be subject to tax at ordinary income rates. The dividend is
not eligible for the dividends received deduction allowable to
corporations. The dividend is foreign source income for US
foreign tax credit purposes.
In addition, under the prior income tax Convention between the
US and the UK (the ‘Prior Convention’), a US shareholder eligible
for the benefits of the Prior Convention could elect to be treated
for US tax purposes only as having received an additional taxable
dividend. The additional deemed dividend was equal to one-ninth
of the actual cash dividend received (an additional dividend of
£1 in the above example). The shareholder was eligible to claim
a US foreign tax credit in the amount of the additional deemed
dividend. The tax credit could, subject to certain limitations and
restrictions, reduce the shareholder’s US Federal income tax
liability. The procedure for making this election was described
in IRS Revenue Procedure 2000-13.
A new income tax Convention between the US and the UK
(the ‘New Convention’) was ratified in 2003. For US persons, it
became effective as to withholding taxes on 1 May 2003 and as
to other taxes on 1 January 2004. Under the New Convention,
US shareholders are not entitled to make the election described
in the preceding paragraph. However, US shareholders may elect
to remain subject to all the provisions of the Prior Convention
for a period of 12 months after the date on which corresponding
provisions of the New Convention would otherwise become
effective. If such an election were made, the US shareholder
would be eligible for the provisions of the preceding paragraph
for dividends received through 30 April 2004.
UK taxation on capital gains
Under United Kingdom law, when you sell shares you may be
liable to pay capital gains tax. However, if you are either:
• an individual who is neither resident nor ordinarily resident in
the United Kingdom; or
• a company which is not resident in the United Kingdom;
you will not be liable to United Kingdom tax on any capital gains
made on disposal of your shares.
The exception is if the shares are held in connection with a trade
or business which is conducted in the United Kingdom through
a branch or an agency.
UK inheritance tax
Under the current estate and gift tax convention between the
United States and the United Kingdom, ordinary shares held by
an individual shareholder who is:
• domiciled for the purposes of the convention in the United
States; and
• is not for the purposes of the convention a national of the
United Kingdom;
will not be subject to United Kingdom inheritance tax on:
• the individual’s death; or
• on a gift of the shares during the individual’s lifetime.
The exception is if the shares are part of the business property
of a permanent establishment of the individual in the United
Kingdom or, in the case of a shareholder who performs
independent personal services, pertain to a fixed base situated
in the United Kingdom.