INTM216400 - Controlled Foreign Companies: The CFC charge gateway chapter 9 - exemptions for profits from qualifying loan relationships: introduction: contents
INTM216450 - Eligibility
Introduction
Where a CFC has non trading finance profits (바카라 사이트淣TFPs바카라 사이트�-INTM203200), the UK resident company (the chargeable company) that will be subject to a CFC charge, or would be subject to a CFC charge but for the claim, may make a claim that those NTFPs, to the extent they arise from qualifying loan relationships (바카라 사이트�蚕尝搁蝉바카라 사이트�) - INTM217000), should be taxed in accordance with the rules in TIOPA10/Part 9A/Chapter 9 rather than those in Chapter 5. A claim must be made by each chargeable company. So if two UK resident group companies each have a 50% relevant interest in the CFC, both companies need to make a claim that either full exemption or 75% exemption applies to the NTFPs arising on the CFC바카라 사이트檚 QLRs.
To be eligible to make a claim the CFC must have business premises at its disposal in its territory of residence from which the business of the CFC is in the main carried out.
The claim will apply to all of the NTFPs arising on the CFC바카라 사이트檚 QLRs, unless any such profits are incidental to any exempt business activity of the CFC. Any such incidental profits are fully exempt under the rules for incidental income in Chapter 3 and so are excluded from both Chapter 5 and any Chapter 9 claim. Exempt business activity for the purposes of the CFC rules is either property business or a trade carried on by the CFC, no trading profits from which pass through the CFC charge gateway for the accounting period.
Where Chapter 9 applies, it will operate to partially or fully exempt any CFC charge that would otherwise arise for the chargeable company that makes the claim in respect of the NTFPs from QLRs.
75% Exemption
In general, only a quarter of the NTFPs from QLRs of the CFC arising in the accounting period (AP) will pass through the CFC charge gateway and so be included in the CFC바카라 사이트檚 chargeable profits i.e. Chapter 9 will operate to exempt 75% of the potential apportionment. This is 바카라 사이트渢he 75% exemption바카라 사이트� at TIOPA10/Part 9A/Ch 9/S371ID (INTM218600). The claim extends only to the chargeable company or companies making the claim, so affects the computation of the CFC charge for that company or companies only.
Full Exemption
In specified circumstances NTFPs from QLRs may be eligible for full exemption either under the 바카라 사이트渓oans funded out of qualifying resources바카라 사이트� or the 바카라 사이트�matched interest바카라 사이트� rules. While a claim under Chapter 9 is also required to exempt profits under the matched interest rule; this rule only applies to NTFPs from QLRs to the extent that they aren바카라 사이트檛 already exempted under either the qualifying resources rules or the 75% exemption rules.