Section 371RC Legal and economic control: the 40% ruleF1

(1)

This section applies to a non-UK resident company (“C”) if—

(a)

in accordance with section 371RB(7), two persons (“the controllers”) control C, and

(b)

one of the controllers is UK resident and the other is non-UK resident.

(2)

If conditions X and Y are met, C is to be taken to be a CFC (if C would not otherwise be).

(3)

Condition X is that the UK resident controller has interests, rights and powers representing at least 40% of the holdings, rights and powers in respect of which the controllers fall to be taken as controlling C.

(4)

Condition Y is that the non-UK resident controller has interests, rights and powers representing—

(a)

at least 40%, but

(b)

no more than 55%,

of the holdings, rights and powers in respect of which the controllers fall to be taken as controlling C.

Annotations

Textual amendments

F1: Pt. 9A inserted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 20 para. 1 (with ss. 56-58)