Finance Act 2000

7 (1) In Part II of Schedule 25 (exempt activities) amend paragraph 6 as follows. U.K.

(2) In sub-paragraph (4) (holding companies other than local holding companies) after “90 per cent of its gross income during the accounting period in question" insert “ falls within sub-paragraph (4ZA) below and ”.

(3) After sub-paragraph (4) insert—

“(4ZA) For the purposes of sub-paragraph (4) above, income of the holding company falls within this sub-paragraph if—

(a) the company from which the holding company directly derives the income is, throughout the accounting period in question, resident in the territory in which the holding company is resident and the income is received by the holding company in that territory; or

(b) the income consists of qualifying dividends.”

(4) In sub-paragraph (4A) (superior holding companies) at the end of paragraph (b) add “; and

(c) falls within sub-paragraph (4AA) below.”

(5) After sub-paragraph (4A) insert—

“(4AA) For the purposes of sub-paragraph (4A) above, income of the superior holding company falls within this sub-paragraph if—

(a) the company from which the superior holding company directly derives the income is, throughout the accounting period in question, resident in the territory in which the superior holding company is resident and the income is received by the superior holding company in that territory; or

(b) the income consists of qualifying dividends.”

(6) In sub-paragraph (4B) (companies from which income of superior holding company is derived) in paragraph (b), at the end of sub-paragraph (ii) add “, and

(iii) falls within sub-paragraph (4BB) below”.

(7) After sub-paragraph (4B) insert—

“(4BB) For the purposes of sub-paragraph (4B)(b) above, income of the superior holding company there mentioned falls within this sub-paragraph if—

(a) the company from which that superior holding company directly derives the income is, throughout the accounting period in question, resident in the territory in which that superior holding company is resident and the income is received by that superior holding company in that territory; or

(b) the income consists of qualifying dividends.”

(8) In sub-paragraph (5) (interpretation of sub-paragraphs (3) to (4B)) after “a reference to a trading company" insert “to which sub-paragraph (5ZA) or (5ZB) below applies.

(5ZA) This sub-paragraph applies to a trading company”.

(9) After sub-paragraph (5ZA) insert—

“(5ZB) This sub-paragraph applies to a trading company if—

(a) it is a controlled foreign company by virtue of subsection (1A) of section 747; and

(b) the person who satisfies the requirement in paragraph (b) of that subsection in relation to the company also controls the holding company or superior holding company.”

(10) After sub-paragraph (5A) insert—

“(5B) In this paragraph “qualifying dividend” means any dividend other than one for which the company paying the dividend is entitled to a deduction against its profits for tax purposes under the law of the territory in which it is resident.”

(11) In sub-paragraph (6) (application of following provisions of Part II of Schedule 25) for “ (4) ” substitute “(4BB)".