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HMRC internal manual

Double Taxation Relief Manual

From
HM Revenue & Customs
Updated
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Isle of Man: double taxation agreement, Article 4: Associated enterprises

For periods up to 31 March 2010 in the United Kingdom & 5 April 2009 in the Isle of Man:

  1. Where-

an enterprise of one of the territories participates directly or indirectly in the management, control or capital of an enterprise of the other territory, or

the same persons participate directly or indirectly in the management, control or capital of an enterprise of one of the territories and an enterprise of the other territory. and

(c) in either case conditions are made or imposed between the two enterprises in their commercial or financial relations, which differ from those which would be made between independent enterprises, then any profits which would but for those conditions have accrued to one of the enterprises but by reason of those conditions have not so accrued may be included in the profits of that enterprise and taxed accordingly.

For periods after 31 March 2010 in the United Kingdom and 5 April 2009 in the Isle of Man:

  1. (1) Where:

(a) an enterprise of one of the territories participates directly or indirectly in the management, control or capital of an enterprise of the other territory; or

(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of one of the territories and an enterprise of the other territory;

and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.

(2) Where one of the territories includes in the profits of an enterprise of that territory - and taxes accordingly - profits on which an enterprise of the other territory has been charged to tax in that other territory and the profits so included are profits which would have accrued to the enterprise of the first-mentioned territory if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other territory shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Arrangement and the taxation authorities of the territories shall if necessary consult each other.”