Corporation Tax Act 2010

121 The precedence condition

(1) An EEA amount meets the precedence condition so far as no relief can be given for it in any territory which—

(a) is outside the United Kingdom,

(b) is not the relevant EEA territory (as defined by section 117(2)), and

(c) is within subsection (2).

(2) A territory is within this subsection if—

(a) a company resident in the territory owns (directly or indirectly) ordinary share capital in the surrendering company,

(b) a UK resident company owns (directly or indirectly) ordinary share capital in the company resident in the territory,

(c) the surrendering company is a 75% subsidiary of the UK resident company, and

(d) the surrendering company is not such a subsidiary as a result of its being a 75% subsidiary of another UK resident company.

(3) In subsection (1) the reference to relief being given in any territory is a reference to relief being given—

(a) by taking the EEA amount (or a part of it) into account in calculating any profits, income or gains of any person chargeable to non-UK tax under the law of the territory,

(b) by the payment of a credit to any person under that law,

(c) by the elimination or reduction of a tax liability of any person under that law, or

(d) in any other way.

(4) Chapter 5 explains how to determine if a company is a 75% subsidiary of another company.