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HMRC internal manual

Corporate Finance Manual

Other tax rules on corporate finance: manufactured payments: manufactured overseas dividends

This guidance applies to manufactured payments made before 1 January 2014, when the tax rules were simplified. For manufactured payments made on or after 1 January 2014, see CFM74430.

The rules for manufactured overseas dividends (MODs) are in ITA07/S581 and S582, ITA07/S922-S925 and CTA10/PT17/CH3 and regulations made under them. The rules are more complex than the rules for the other types of manufactured payments and are set out in CFM74370 to CFM74420.

The rules provide a regime covering both treatment of MODs for tax purposes and setting out a tax deduction regime. Detailed guidance on the operation of the rules is available in the guidance notes at , which should be consulted where detailed guidance is needed on how the rules operate in particular circumstances.

Definition of ‘overseas securities’

‘Overseas securities’ are shares, stock, or other securities issued by a government or public or local authority of a territory outside the UK or by any other body of persons not resident in the UK. This includes both overseas shares and overseas debt securities.

The terms UK manufacturer and UK recipient refer to a manufacturer or recipient who is resident in the UK or who pays or receives the manufactured overseas dividend in the course of carrying on a trade in the UK through a permanent establishment.