This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

International Manual

Controlled Foreign Companies: exemptions - Exempt Activities Test ('EAT'): Income requirement of superior holding companies

ICTA88/SCH25/PARA 6(4A) and (4ZA)

For a superior holding company to pass the exempt activities test at least 90% of its gross income (see INTM254960 in regard to exchange gains and losses) must:

  • represent qualifying exempt activity income (INTM254980) of its subsidiaries, and
  • be derived directly from (INTM255010) companies which it controls which either
  1. are not superior holding companies but are engaged in exempt activities or are exempt trading companies or
  2. are superior holding companies throughout the period and at least 90% of their gross income
  • represents qualifying exempt activity income (INTM254980), and
  • is derived directly from companies which they control and which are either carrying on exempt activities or are exempt trading companies or are themselves superior holding companies satisfying the income requirement


  • be in the form of ‘qualifying dividends’ (see INTM254960) - u n l e s s the subsidiary is resident in the same territory as the superior holding company and the income is received in that territory (i.e. it is not received in an overseas permanent establishment of the holding company).