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HMRC internal manual

International Exchange of Information Manual

Action 5 rulings: Types of rulings to exchange: Ruling related to a preferential regime

The term ‘preferential regimes’ refers to the definition given in Chapter 5 of the 2015 Final Report of Action 5.


In the spirit of international cooperation and transparency, HMRC has agreed to provide cross-border customer-specific rulings on Patent Box and Tonnage Tax under this heading; although the UK does not agree that they are preferential regimes.   There are no other areas of UK taxation that fall into the category of preferential regimes.


Relevant jurisdictions with which the ruling will be exchanged will be:

  • The jurisdiction of residence of the ultimate parent company
  • The jurisdiction of residence of the immediate parent company
  • The jurisdiction(s) of residence of all related parties with which the customer enters a transaction (IEIM540400)


 The related parties for this heading are those meeting the 25% threshold which are:

  • Parties with which the customer enters into a transaction for which a preferential treatment is granted
  • Parties to a transaction which gives rise to income benefiting from a preferential treatment (this rule also applies in the context of a permanent establishment)


Example distinguishing when to exchange under Action 5

Some of the profits of a company are agreed to fall with the patent box regime.  The company seeks a non-statutory clearance on a wholly-domestic Corporation Tax issue relating to profits that fall outside the patent box.  The clearance is given.  It is not exchangeable either under Action 5 (not related to the patent box) or under DAC (not a cross-border transaction).