In Peru, the Double Taxation Agreement (DTA) with the United Kingdom will enter into force on 1 January 2027. The treaty will reshape the tax treatment of profit repatriation and cross-border financing between the two countries.

As the world’s fifth-largest economy, the UK serves as a major commercial hub for international investors seeking access to both the British and wider European markets. For Peru, this agreement represents a significant opportunity to strengthen trade and investment ties with the United Kingdom.

What does the DTA with the UK mean?

The treaty introduces several key benefits:

• Lower withholding tax on dividends: the withholding tax on dividends distributed from Peru to UK investors (and vice versa) will be reduced from the standard 30% corporate rate to a maximum of 10%, directly improving net cash flows for shareholders.
• More efficient corporate financing: interest payments on cross-border loans used for business financing or working capital will also be subject to a 10% withholding tax, reducing the cost of financing between parent companies and subsidiaries.
• Greater protection against treaty abuse: the agreement incorporates the OECD’s Principal Purpose Test (PPT), requiring businesses to demonstrate genuine economic substance. Boards should ensure that any UK-based structures have real commercial operations and substance, as the Peruvian Tax Authority (SUNAT) may deny treaty benefits to entities established solely for tax avoidance purposes (treaty shopping).

Key takeaways

Double Taxation Agreements are designed to encourage international investment while strengthening cross-border tax transparency. The Peru–UK treaty is expected to:

• eliminate double taxation;
• improve corporate cash flow;
• strengthen international tax oversight; and
• reduce treaty abuse.

Expanding from Peru into the United Kingdom provides businesses with an opportunity to access new European markets and develop sector-specific growth strategies. Auxadi’s specialists can help you assess your international expansion plans and support your entry into the European market.

About Auxadi

With 26 subsidiaries across Europe, the United States, and Latin America, Auxadi is today the leading Spanish accounting firm serving multinational companies and real estate investment funds. Through its technology-driven approach and strong client-focused culture, Auxadi acts as an extension of its clients’ finance departments worldwide, providing accounting, tax, payroll, transfer pricing, and corporate legal services.

Its proprietary MySPV technology platform, more than 300 employees, and over 1,700 clients have positioned Auxadi as a benchmark in the tech-enabled services sector, not only in Spain but internationally.

Author:

Wilmer Alberth Pérez

Tax Manager – PE