MTT42020 - Particular entities and adjustments: Miscellaneous entities: Sovereign wealth funds

A sovereign wealth fund is a governmental entity that has a principal purpose of managing or investing the assets of that government.

A sovereign wealth fund cannot be an ultimate parent of a group. Where a sovereign wealth fund would be the ultimate parent of a group, it is to be ignored for the purposes of MTT and will not be regarded as the ultimate parent of its group.

Where a sovereign wealth fund has a controlling interest in an entity (“A”) arising from direct ownership interests, A is to be regarded as the ultimate parent of a group (consisting of A and any entities in which A has a controlling interest).

This is set out in section 252 of Finance (No.2) Act 2023.

See MTT10240 for guidance on the definition of governmental entity.

Example

ABC Government Fund is a sovereign wealth fund which is the ultimate parent of a qualifying multinational group.

A Holding Ltd is a wholly owned direct subsidiary of ABC Government Fund. A Holding Ltd has numerous subsidiaries in various territories.

Because ABC Government Fund meets the definition of a sovereign wealth fund, it is not to be regarded as the ultimate parent of a group and will be ignored for MTT purposes.

A Holding Ltd will be regarded as the ultimate parent of a group consisting of A Holding Ltd and the entities in which it has a controlling interest. That group will have to meet the requirements to be a qualifying group in its own right in order to be a qualifying group for MTT purposes.