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HMRC internal manual

International Manual

Controlled Foreign Companies: exemptions - excluded countries: Banks and Insurance Companies

SI1998/3081 Regulation 5(4)

Special rules apply in computing the non-local source income of banks and insurance companies. In the case of controlled foreign companies which carry on the business of banking or insurance, any income falling within subparagraphs (a) to (d) of SI1998/3081 regulation 5(3) is disregarded in computing the company’s non-local source income where it is both an integral part of the company’s trading income and within the charge to tax of the territory of residence of that company. For these purposes a bank is a company carrying on a bona fide banking business and an insurance company means a company effecting or carrying out contracts of insurance, where contract of insurance has the meaning given by Article 3(1) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001. The special rules for banks and insurance companies apply equally where such businesses are carried on through a permanent establishment and the provisions in SI1998/3081 regulation 6(2) apply.