Controlled Foreign Companies: Entity Exemptions: contents
The profits of a CFC are exempt from the CFC charge if any one of five entity-level exemptions applies.
INTM224100 - Chapter 10 - Exempt Period Exemption
The Exemption Period Exemption provides an entity-level exemption for CFCs that have come under UK control for the first time. The period of exemption is temporary, usually 12 months.
INTM224700 - Chapter 11 - Excluded Territorities Exemption
The Excluded Territories Exemption provides an entity-level exemption for CFCs that are tax resident in certain territories.
INTM225500 - Chapter 12 - The Low Profits Exemption
The low profits exemption provides an entity-level exemption for CFCs with low levels of profits in an accounting period.
INTM225700 - Chapter 13 - Low Profit Margin Exemption
The low profit margin exemption is an entity-level exemption aimed at those CFCs that perform substantial (in terms of volume) but relatively low value added functions outside the UK such as:
- back-office functions,
- local marketing and distribution operations,
- toll manufacturing, or
- call or data-processing centres.
INTM226000 - Chapter 14 - The Tax Exemption
The purpose of this entity level exemption is to easily exclude a CFC from having to apply the CFC rules to its profits when it pays a normal to high level of tax in its territory of residence.