C2C3C4C5C6C7C8C9C10C11C12C13C14C15PART XVIII DOUBLE TAXATION RELIEF
Pt. 18 applied (with effect in accordance with Sch. 29 Pt. 14 of the affecting Act) by Finance Act 2002 (c. 23), Sch. 29 para. 87
Pt. 18 modified (22.7.2004) by Finance Act 2004 (c. 12), s. 107(5)
Pt. 18 applied by Finance Act 1996 (c. 8), Sch. 9 para. 12E(5) (as inserted (29.11.2007 with effect in accordance with regs. 1(2), 3(1) of the amending S.I. (as amended by S.I. 2008/1579, reg. 4(1))) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2007 (S.I. 2007/3186), Sch. 1 para. 16)
Pt. 18 applied by Finance Act 2002 (c. 23), Sch. 26 para. 30E(5) (as inserted (29.11.2007 with effect in accordance with regs. 1(2), 3(1) of the amending S.I. (as amended by S.I. 2008/1579, reg. 4(1))) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2007 (S.I. 2007/3186), Sch. 1 para. 19)
Pt. 18 applied by Finance Act 1996 (c. 8), Sch. 9 para. 12C(3) (as substituted (29.11.2007 with effect in accordance with regs. 1(2), 3(2) of the amending S.I.) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2007 (S.I. 2007/3186), Sch. 2 para. 8)
Pt. 18 applied by Finance Act 2002 (c. 23), Sch. 26 para. 30C(3) (as substituted (29.11.2007 with effect in accordance with regs. 1(2), 3(2) of the amending S.I.) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2007 (S.I. 2007/3186), Sch. 2 para. 10)
Pt. 18 applied by Finance Act 2002 (c. 23), Sch. 29 para. 87A(3) (as substituted (29.11.2007 with effect in accordance with regs. 1(2), 3(2) of the amending S.I.) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2007 (S.I. 2007/3186), Sch. 2 para. 12)
Pt. 18 applied by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 140H(3), 140I(3), 140J(3) (as inserted (29.11.2007 with effect in accordance with regs. 1(2), 3(3) of the amending S.I. (as amended by S.I. 2008/1579, reg. 4(2))) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2007 (S.I. 2007/3186), Sch. 3 para. 1)
Pt. 18 applied by Finance Act 1996 (c. 8), Sch. 9 paras. 12H(3), 12I(3) (as inserted (29.11.2007 with effect in accordance with regs. 1(2), 3(3) of the amending S.I. (as amended by S.I. 2008/1579, reg. 4(2))) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2007 (S.I. 2007/3186), Sch. 3 para. 2)
Pt. 18 applied by Finance Act 2002 (c. 23), Sch. 26 paras. 30G(3), 30H(3) (as inserted (29.11.2007 with effect in accordance with regs. 1(2), 3(3) of the amending S.I. (as amended by S.I. 2008/1579, reg. 4(2))) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2007 (S.I. 2007/3186), Sch. 3 para. 4)
Pt. 18 applied by Finance Act 2002 (c. 23), Sch. 29 paras. 85B(3), 85C(3) (as inserted (29.11.2007 with effect in accordance with regs. 1(2), 3(3) of the amending S.I. (as amended by S.I. 2008/1579, reg. 4(2))) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2007 (S.I. 2007/3186), Sch. 3 para. 5)
Pt. 18: power to amend conferred (1.4.2009 with effect in accordance with s. 1329(1) of the affecting Act) by Corporation Tax Act 2009 (c. 4), s. 533(2)(3) (with Sch. 2 Pts. 1, 2)
Pt. 18 modified (with effect in accordance with s. 56(3) of the modifying Act) by Finance Act 2009 (c. 10), s. 56(1)
C1CHAPTER II RULES GOVERNING RELIEF BY WAY OF CREDIT
Pt. 18 Chs. 1, 2 modified (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 277(1), 289 (with ss. 60, 101(1), 171, 201(3))
Tax underlying dividends
801 Dividends paid between related companies: relief for U.K. and third country taxes.
M11
Where a company resident outside the United Kingdom (“the overseas company”) pays a dividend to a F1 company falling within subsection (1A) below (“the relevant company”) and the overseas company is related F2to the relevant company, then for the purpose of allowing credit under any arrangements against corporation tax in respect of the dividend, there shall be taken into account, as if it were tax payable under the law of the territory in which the overseas company is resident—
a
any United Kingdom income tax or corporation tax payable by the overseas company in respect of its profits; and
b
any tax which, under the law of any other territory, is payable by the overseas company in respect of its profits.
F31A
A company falls within this subsection if—
a
it is resident in the United Kingdom; or
b
it is resident outside the United Kingdom but the dividend mentioned in subsection (1) above forms part of the profits of a F6permanent establishment of the company’s in the United Kingdom.
2
Where the overseas company has received a dividend from a third company and the third company is related to the overseas company, then, F7subject to subsection (4) below, there shall be treated for the purposes of subsection (1) above as tax paid by the overseas company in respect of its profits any underlying tax payable by the third company, to the extent that it would be taken into account under this Part if the dividend had been paid by a company resident outside the United Kingdom to a company resident in the United Kingdom and arrangements had provided for underlying tax to be taken into account.
F42A
Section 799(1)(b) applies for the purposes of subsection (2) above only—
a
if the overseas company and the third company are not resident in the same territory; or
F8aa
if the overseas company is an ADP controlled foreign company as respects any of its accounting periods and the dividend mentioned in subsection (1) above is an ADP dividend of that company (in which case see also subsection (2B)); or
b
in such other cases as may be prescribed by regulations made by the Treasury.
F92B
In any case falling within subsection (2A)(aa) above, section 799(1)(b) applies for the purposes of subsection (2) above as if for section 799(1A) there were substituted—
1A
The formula is—
where—
D is the amount of the dividend; and
X is the maximum relievable rate, expressed as a decimal fraction;
and for the purposes of this subsection the maximum relievable rate is the rate of corporation tax F13applicable to profits of the company by which the dividend is received for the accounting period in which it is received or, where there is more than one such rate, the average rate over the whole of that accounting period.
3
Where the third company has received a dividend from a fourth company and the fourth company is related to the third company, then, subject to subsection (4) below, tax payable by the fourth company shall similarly be treated for the purposes of subsection (2) above as tax paid by the third company; and so on for successive companies each of which is related to the one before.
4
Subsections (2) and (3) above are subject to the following limitations—
a
no tax shall be taken into account in respect of a dividend paid by a company resident in the United Kingdom except United Kingdom corporation tax and any tax for which that company is entitled to credit under this Part; and
b
no tax shall be taken into account in respect of a dividend paid by a company resident outside the United Kingdom to another such company unless it could have been taken into account under the other provisions of this Part had the other company been resident in the United Kingdom.
F54A
F10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4B
F10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4C
F10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4D
F10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
For the purposes of this section a company is related to another company if that other company—
a
controls directly or indirectly, or
b
is a subsidiary of a company which controls directly or indirectly,
not less than 10 per cent. of the voting power in the first-mentioned company.
F125A
For the purposes of subsections (2) and (3) above (including any determination of the extent to which underlying tax paid by the third, fourth or subsequent company in question would be taken into account under this Part if the conditions specified for the purpose in subsection (2) above were satisfied) a company is also related to another company if that other company—
a
controls directly or indirectly, or
b
is a subsidiary of a company which controls directly or indirectly,
not less than 10% of the ordinary share capital of the first-mentioned company.
F116
For the purposes of this section—
a
a controlled foreign company is an “ADP controlled foreign company” as respects any of its accounting periods if, by virtue only of section 748(1)(a), no apportionment under section 747(3) falls to be made as respects that accounting period;
b
an “ADP dividend” of a controlled foreign company is a dividend by virtue of which the controlled foreign company is an ADP controlled foreign company as respects any of its accounting periods.
7
In this section—
“accounting period”, in relation to a controlled foreign company, has the same meaning as in Chapter 4 of Part 17 (see section 751);
“controlled foreign company” has the same meaning as in Chapter 4 of Part 17 (see section 747(2)).
Pt. 18 modified (3.5.1994) by Finance Act 1994 (c. 9), Sch. 20 para. 10 (as amended by Finance Act 1995 (c. 4), s. 122(4)(5)) (with Sch. 20 para. 12(2)(a))