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HMRC internal manual

Guidance on Real Estate Investment Trusts

HM Revenue & Customs
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Group REITs: non-resident group members


A group for UK-REIT purposes can include non-resident companies, so long as thecompanies meet the 75%/ effective 51% subsidiary requirement (see GREIT11025).The only company that must be UK resident is the principal company.

The activities of the world-wide group are looked at for the Tax-exempt businessConditions and for the Balance of business Conditions (see GREIT12005.and GREIT12010). It does not matter where the companies areresident nor where their property is located.

The UK-REIT legislation divides this world-wide group into two parts, called G (propertyrental business) and G (residual). The first includes the world-wide property rentalbusiness of the group. The second covers all the other group activities.

Once these conditions have been met, the focus of the regime reduces to the parts of thegroup over which the UK has primary taxing rights. This is called the ‘UK business’ of thegroup. This includes all the activities of UK resident members of the group, together withthose activities carried on the UK by non-resident members of the group.

GREIT11105 and GREIT11110 lookat how the rules of the regime apply to these non-resident members of the group: i.e.those that have a taxable presence in the UK. The legislation is set out in paragraph 32Schedule 17 FA 2006. All other non-resident subsidiaries are not covered by the regime:for example, their property rental income is not included in working out the amount out ofwhich 90% must be distributed by the principal company under deduction of basic rate tax(the Distribution Condition).