Corporation Tax Act 2009 section 18CB

Profits and losses from investment business

Section 18CB excludes profits and losses from a company's investment business when calculating the exempt amounts for a foreign permanent establishment, unless those investment assets are effectively connected with a trade or overseas property business carried on through that establishment.

• Profits or losses from any part of a company's business that consists of making investments are excluded when calculating the relevant profits or losses amounts for the foreign permanent establishment exemption
• An exception applies where the investment assets are effectively connected with a trade or overseas property business carried on through the permanent establishment in the territory
• The term "effectively connected" takes its meaning from the OECD Model Tax Convention on Income and on Capital
• If a permanent establishment carries on only investment business, its profits or losses will not qualify for exemption from corporation tax