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HMRC internal manual

International Manual

Controlled Foreign Companies: exemptions - Exempt Activities Test ('EAT'): Business establishment and place of effective management

ICTA88/SCH25/PARA6(1)(a) - (b)

The requirements of ICTA88/SCH25/PARA6(1)(a) and (b) Schedule 25 as to presence in the territory of residence apply for holding and superior companies as they do for other companies (see INTM254830 to INTM254840). The only difference for such companies is that the employees test in ICTA88/SCH25/PARA8 is relaxed so that staff whose remuneration is paid by a person connected with, and resident in, the same territory as the holding company may be regarded as employed by the holding or superior holding company whether or not they are engaged wholly or mainly in the company’s business. This recognises that the activities of a holding or superior holding company frequently do not require the services of full-time staff.