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HMRC internal manual

Tonnage Tax Manual

HM Revenue & Customs
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Relevant shipping profits: Distributions from qualifying overseas shipping companies


The conditions to be satisfied if a distribution from an overseas shipping company are to be included in a tonnage tax company’s relevant shipping income are set out in paragraph 49(2) of Schedule 22. They are:

  1. That the overseas company operates qualifying ships (see TTM03500).
  2. That more than 50% of the voting power in the overseas company is held by a company resident in an EU member State, or that two or more companies each of which is resident in a member State hold in aggregate more than 50% of that voting power.
  3. That the 75% limit (see TTM05001) is not exceeded in relation to the overseas company in any accounting period in respect of which the distribution is paid. For this purpose, the test is applied to ships operated by the overseas company only, as if it were a singleton qualifying company.
  4. That all the income of the overseas company is such that, if it were a tonnage tax company, it would be relevant shipping income.
  5. That the distribution is paid entirely out of profits arising at a time when
* the conditions in paragraphs (a) to (d) above were met, and
* the tonnage tax company was subject to tonnage tax, (see [TTM06430](
  1. The profits of the overseas company out of which the distribution is paid are subject to a tax on profits (in the country of residence of the company or elsewhere, or partly in that country and partly elsewhere). See TTM06450


FA00/SCH22/PARA49 (2) (conditions) TTM17286
Outline of distributions from qualifying overseas shipping companies TTM06400
Meeting the conditions TTM06420
Timing TTM06430