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HMRC internal manual

International Manual

The attribution of capital to foreign banking permanent establishments in the UK: The approach in determining an adjustment to funding costs - STEP 3: Determining the equity capital: interest-free loans

For the purpose of determining the capital attribution to a UK permanent establishment (’PE’) under CTA09/Part 2/Chapter 4, interest-free loans received by the PE from other parts of the same company will be treated as if they were equity capital, but interest free loans from a separate legal entity, for example from another company, will not be regarded as equity capital.