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HMRC internal manual

International Manual

Controlled Foreign Companies: exemptions - Exempt Activities Test ('EAT'): Exempt trading companies


A company is an exempt trading company if it is a trading company throughout each of its accounting periods which falls wholly or partly within the accounting period of the holding company under consideration and is:-

  1. not subject to a lower level of taxation, or
  2. is resident in a territory specified in the excluded countries regulations and satisfies the condition regarding income or gains, or
  3. satisfies the motive test.