Corporation Tax Act 2009

[F1 Chapter 2 U.K. Exemption of distributions received by small companies

Textual Amendments

F1 Pt. 9A inserted (with effect in accordance with Sch. 14 para. 31 of the amending Act) by Finance Act 2009 (c. 10), Sch. 14 para. 1 (with Sch. 14 para. 32)

931B Exemption from charge to tax U.K.

A dividend or other distribution of a company that is received in an accounting period of the recipient in which the recipient is a small company is exempt if—

(a) the payer is a resident of (and only of) the United Kingdom or a qualifying territory at the time that the distribution is received,

(b) the distribution is not of a kind mentioned in [F2 paragraph E or F in section 1000(1) of CTA 2010] (certain non-dividend distributions),

(c) no deduction is allowed to a resident of any territory outside the United Kingdom under the law of that territory in respect of the distribution, and

(d) the distribution is not made as part of a tax advantage scheme.

Textual Amendments

F2 Words in s. 931B(b) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 659 (with Sch. 2)

931C Meaning of “qualifying territory” U.K.

(1) For the purpose of section 931B a territory is a “qualifying territory” if—

[F3 (a) arrangements made in relation to the territory have effect under section 2(1) of TIOPA 2010 (“double taxation relief arrangements”), and]

(b) the arrangements contain a non-discrimination provision.

(2) The Treasury may by regulations—

(a) provide that a territory specified in or of a description specified in the regulations that does not satisfy subsection (1)(a) or (b) is a qualifying territory for the purpose of section 931B, and

(b) provide that a territory so specified or described that satisfies subsection (1)(a) and (b) is not a qualifying territory for that purpose.

(3) For the purpose of section 931B a company is a resident of a territory if, under the laws of the territory, the company is liable to tax there—

(a) by reason of its domicile, residence or place of management, but

(b) not in respect only of income from sources in that territory or capital situated there.

(4) In subsection (1) “non-discrimination provision”, in relation to double taxation relief arrangements, means a provision to the effect that nationals of a state which is a party to those arrangements (a “contracting state”) are not to be subject in any other contracting state to—

(a) any taxation, or

(b) any requirement connected with taxation,

which is other or more burdensome than the taxation and connected requirements to which nationals of that other state in the same circumstances (in particular with respect to residence) are or may be subjected.

(5) In subsection (4) “national”, in relation to a contracting state, includes—

(a) an individual possessing the nationality or citizenship of the contracting state, and

(b) a legal person, partnership or association deriving its status as such from the laws in force in that contracting state.

(6) Regulations under this section may—

(a) describe a territory by reference to the double taxation relief arrangements for the time being in force in relation to the territory,

(b) make different provision in relation to different descriptions of company, and

(c) make provision having effect in relation to accounting periods current on the day on which the regulations are made.

Textual Amendments

F3 S. 931C(1)(a) substituted (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 98 (with Sch. 9 paras. 1-9, 22)

[F4 931CA Further exemption where distribution received from CFC U.K.

(1) Subsection (2) applies if—

(a) under Part 9A of TIOPA 2010 (controlled foreign companies), the CFC charge is charged in relation to a CFC's accounting period,

(b) a dividend or other distribution of the CFC is received in an accounting period (for corporation tax purposes) of the recipient in which the recipient is a small company,

(c) the whole or a part of the distribution is paid in respect of profits which are chargeable profits of the CFC for its accounting period mentioned in paragraph (a), and

(d) the requirements of section 931B(b) to (d) are met in relation to the distribution.

(2) The distribution is exempt.

(3) If part of the distribution is not paid in respect of chargeable profits—

(a) for the purposes of this Part and Part 2 of TIOPA 2010 that part of the distribution is treated as a separate distribution, and

(b) subsection (2) does not apply to that separate distribution.

(4) In this section references to chargeable profits of the CFC are limited to chargeable profits so far as apportioned to chargeable companies at step 3 in section 371BC(1) of TIOPA 2010.]]

Textual Amendments

F4 S. 931CA inserted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 20 para. 30 (with Sch. 20 para. 52)