What Is Unilateral Relief?
Unilateral relief refers to double taxation relief which a country grants under domestic tax law, independently of any treaty, for foreign tax on foreign income.
Also known as: Unilateral Double Taxation Relief, Unilateral Credit Relief.
How Unilateral Relief works
Unilateral relief is relief from double taxation which a residence country grants through its own legislation, usually a credit for foreign tax or an exemption of foreign income, so that taxpayers receiving income from countries without a treaty are not taxed twice in full. In the UK, section 9 of TIOPA 2010 allows credit for non-UK tax which corresponds to UK income tax, corporation tax or capital gains tax. Credits are generally capped at domestic tax on the same income. Eligibility, ordering and limits differ by country.
Unilateral Relief vs Treaty Relief
Unlike treaty relief, which derives from a bilateral double tax treaty, unilateral relief rests solely on the residence country's domestic law and may apply where no treaty exists.
Example
Illustrative example: A designer resident in Country A earns fees taxed at source in Country B, and no treaty links both countries. Country A's domestic law grants a credit for Country B's tax, limited to Country A's tax on the same fees, leaving any excess foreign tax unrelieved.
Common misconception
Myth: Without a tax treaty, double taxation cannot be relieved.
Reality: Many countries grant unilateral relief through domestic credit or exemption rules, although conditions and caps generally make it narrower than treaty relief.
Frequently asked questions
Can double taxation be relieved without a treaty?
Double taxation may be relieved without a treaty where the residence country's domestic law provides unilateral relief, typically a foreign tax credit or exemption, subject to conditions on the type of foreign tax.
How does unilateral relief differ from treaty relief?
Unilateral relief arises from domestic legislation alone, while treaty relief comes from a double tax treaty, which may also cap source-country tax and offer dispute resolution.
Related terms
- Double Taxation Relief — Umbrella category including unilateral relief
- Foreign Tax Credit (FTC) — Common method of unilateral relief
- Double Tax Treaty (DTT) — Alternative, bilateral source of relief
- Double Taxation — Problem unilateral relief addresses
Related guides
- Tax treaties and international taxation — Treaty relief compared with domestic mechanisms
Sources
Last verified: 2026-10-09. This entry is general information, not tax or legal advice; rules vary by country and change over time.
