http://www.legislation.gov.uk/ukpga/2010/8/section/16Taxation (International and Other Provisions) Act 2010An Act to restate, with minor changes, certain enactments relating to tax; to make provision for purposes connected with the restatement of enactments by other tax law rewrite Acts; and for connected purposes.texttext/xmlenStatute Law Database2026-04-17Expert Participation2025-03-20 Part 2Double taxation reliefCHAPTER 1Double taxation arrangements and unilateral relief arrangements<Emphasis>Unilateral relief arrangements</Emphasis>Rule 8: credit for underlying tax on dividend paid by exchanged associate161This section applies for the purposes of section 12(1).2Credit under section 9 for overseas tax on a dividend paid by a company (“P”) resident in the territory is allowed if each of conditions A to C is met.3Condition A is that—athe recipient of the dividend is a company resident in the United Kingdom, orbthe recipient is a company resident outside the United Kingdom but the dividend forms part of the profits of a permanent establishment of the recipient in the United Kingdom.4Condition B is that the recipient—adirectly or indirectly controls, orbis a subsidiary of a company which directly or indirectly controls,less than 10% of the voting power in P.5If condition B is met, in subsection (6) “the held percentage” means the voting power in P which is directly or indirectly controlled by—athe recipient, orba company of which the recipient is a subsidiary.6Condition C is that—athe held percentage has been acquired in exchange for voting power in another company (“X”),bbefore the exchange, the recipient—idirectly or indirectly controlled, oriiwas a subsidiary of a company which directly or indirectly controlled,at least 10% of the voting power in X,cthe recipient shows that the exchange (and any reduction after the exchange)—icould not have been prevented by any reasonable endeavours on the part of the recipient, a parent or an associate, andiiwas due to a cause or causes not reasonably foreseeable by the recipient, a parent or an associate when control of the relevant voting power was acquired, anddthe recipient shows that no reasonable endeavours on the part of the recipient, a parent or an associate could have restored, or (as the case may be) increased, the held percentage to at least 10%.7For the purposes of subsection (6) a company is an “associate” if—athe company is neither the recipient nor a parent,bbefore the exchange, the voting power in X that is in question was controlled otherwise than directly by the recipient, andcthe company is relevant for determining whether, before the exchange, the recipient—iindirectly controlled, oriiwas a subsidiary of a company which directly or indirectly controlled,at least 10% of the voting power in X.8In subsections (6) and (7) “parent” means a company of which the recipient is a subsidiary.9In subsection (6) “the relevant voting power” means—athe voting power in X as a result of which relief was due under section 14 before the exchange, orbif control of the whole of that voting power was not acquired at the same time, that part of the voting power of which control was last acquired.10For the purposes of this section, the recipient is a subsidiary of another company if the other company controls, directly or indirectly, at least 50% of the voting power in the recipient.Pt. 2 modified by 1988 c. 1, Sch. 19ABA paras. 26-28 (as inserted (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. 34(3) (with Sch. 9 paras. 1-9, 22))Pt. 2 applied by 2010 c. 4, s. 269DL(6) (as inserted (with effect in accordance with Sch. 3 Pt. 3 of the amending Act) by Finance (No. 2) Act 2015 (c. 33), Sch. 3 para. 1)