INTM558030 - Hybrids: dual territory double deduction (Chapter 10): conditions to be satisfied: condition A
Condition A
Condition A of s259JA requires that a company is either
- a dual resident company, or
- a relevant multinational company
Dual resident company
A dual resident company for the purpose of Chapter 10 is defined at s259JA(3). A company is a dual resident company if it is resident in the UK, and it is also within the charge to a tax under the law of a territory outside the United Kingdom because
- it derives its status as a company from that law
- its place of management is in that territory, or
- it is for some other reason treated as resident under the law of that territory
Note that a UK company鈥檚 foreign subsidiary (upon whose profits a CFC charge is based) is not a dual resident company. While the subsidiary is deemed to be a UK resident company in order to compute the assumed taxable total profits for UK CFC purposes per section 371SD(1)(a) TIOPA 2010, it is not in fact a UK resident company.
Relevant multinational company
A relevant multinational company is defined at 259JA(4). It is a company that is
- within the charge to tax in a jurisdiction (known as 鈥榯he PE jurisdiction鈥�), in which it is not resident for tax purposes, because it carries on business in that territory through a permanent establishment in that territory, and
-
either
- (i) the PE jurisdiction is the UK, or
- (ii) the territory in which the company is resident for tax purposes (known as 鈥榯he parent jurisdiction鈥�), is the UK
Company is not defined in the legislation, so takes its normal meaning under UK law.
Permanent establishment includes anything that is a permanent establishment within the meaning of section 1119 CTA 2010, or within any similar concept outside the United Kingdom. An overseas concept of a permanent establishment is not excluded simply because it is not based on Article 5 of the OECD model tax convention on income and capital.