INTM558030 - Hybrids: dual territory double deduction (Chapter 10): conditions to be satisfied: condition A
Condition A
Condition A of s259JA requires that a company is either
- a dual resident company, or
- a relevant multinational company
Dual resident company
A dual resident company for the purpose of Chapter 10 is defined at s259JA(3). A company is a dual resident company if it is resident in the UK, and it is also within the charge to a tax under the law of a territory outside the United Kingdom because
- it derives its status as a company from that law
- its place of management is in that territory, or
- it is for some other reason treated as resident under the law of that territory
Note that a UK company’s foreign subsidiary (upon whose profits a CFC charge is based) is not a dual resident company. While the subsidiary is deemed to be a UK resident company in order to compute the assumed taxable total profits for UK CFC purposes per section 371SD(1)(a) TIOPA 2010, it is not in fact a UK resident company.
Relevant multinational company
A relevant multinational company is defined at 259JA(4). It is a company that is
- within the charge to tax in a jurisdiction (known as ‘the PE jurisdiction’), in which it is not resident for tax purposes, because it carries on business in that territory through a permanent establishment in that territory, and
-
either
- (i) the PE jurisdiction is the UK, or
- (ii) the territory in which the company is resident for tax purposes (known as ‘the parent jurisdiction’), is the UK
Company is not defined in the legislation, so takes its normal meaning under UK law.
Permanent establishment includes anything that is a permanent establishment within the meaning of section 1119 CTA 2010, or within any similar concept outside the United Kingdom. An overseas concept of a permanent establishment is not excluded simply because it is not based on Article 5 of the OECD model tax convention on income and capital.