Explanatory note

The Order gives effect to the taxation provisions in Article X of the Agreement regarding the Status of Forces of Parties to the North Atlantic Treaty dated 19th June 1951 (“the NATO SOFA”), Article VII of the Protocol on the Status of International Military Headquarters set up pursuant to the North Atlantic Treaty dated 28^th August 1952 (“the Paris Protocol”) and Article I of the Agreement among the State Parties to the North Atlantic Treaty and the Other States Participating in the Partnership for Peace regarding the Status of their Forces dated 19th June 1995 (“the PfP SOFA”).

The Order revokes the 1961 Orders which gave effect to the NATO SOFA and the 1998 Orders which gave effect to the PfP SOFA. The Order updates and consolidates the list of NATO countries, PfP countries and headquarters.

The Order provides for tax exemptions for the members of a visiting force of a NATO country listed in Schedule 2; for the members of a visiting force of a PfP country listed in Schedule 3 and for members of those forces who are attached to one of the headquarters listed in Schedule 4.

These exemptions are available under UK law by virtue of the following provisions. Section 303 of the Income Tax (Earnings and Pensions) Act 2003 (c.1) provides for an exemption from income tax on earnings. Section 833 of the Income Tax Act 2007 (c.3) provides for an exemption for non-UK source income. As a result of the designation under section 833 of the Income Tax Act 2007 (c.3), section 11 of the Taxation of Chargeable Gains Act 1992 (c.12) applies to provide for an exemption from capital gains tax. Section 155 of the Inheritance Tax Act 1984 (c.51) provides for an exemption from inheritance tax. Section 74A of the Finance Act 1960 provides for an exemption from Stamp Duty Land Tax.

A Tax Information and Impact Note has not been prepared for this Instrument as it contains no substantive changes to tax policy but updates and consolidates previous Orders in Council.