ANNEX 1:: MINOR CHANGES IN THE LAW MADE BY THE BILL This change is in taxpayers’ favour in principle. But it is expected to have no practical effect as it is in line with current practice.
Change 135: Enactment of the European Investment Bank (Designated International Organisation) Order 1996 (SI 1996/1179): sections 879, 991 and Schedule 1 (section 840A of ICTA)
This change enacts the provisions of the European Investment Bank (Designated International Organisation) Order 1996 (SI 1996/1179) (the Order).
Under section 840A(1)(d) of ICTA the Treasury has powers to designate a “relevant international organisation” as a bank. That provision is rewritten for income tax in section 991(4) of this Act.
To date the power has only been used in relation to the European Investment Bank (the EIB). The operative provisions of the Order are in Articles 3 and 4. Article 3 of the Order designates the EIB as a bank. This is enacted by this Act, so that:
	for income tax purposes, the EIB is now specifically included in the definition of “bank” in section 991(2)(d); and
	for corporation tax purposes, the definition of “bank” in section 840A of ICTA includes the EIB (see new subsection (1)(ca) of that section).
Article 4 modifies the normal rules about the deduction of a sum representing income tax from interest in the case of interest paid to the EIB.
Under section 874(1), certain persons paying yearly interest must deduct from the payment a sum representing income tax. Section 879(1) provides an exception to that duty if the person beneficially entitled to the interest is within the charge to corporation tax. Article 4 of the Order withdraws, in the case of the EIB, the condition that the person must be within the charge to corporation tax. This allows interest on advances from the EIB to be paid gross.
This is enacted in section 879(3). As a result of this Change, the Order is revoked by this Act.
The Treasury powers to designate further international organisations will remain as before, both for income tax and corporation tax purposes.