Corporation Tax Act 2009 section 18M

Streamed opening negative amounts: "matching"

Section 18M explains how a streamed opening negative amount for a particular territory is gradually reduced by matching it against subsequent profits from that territory, and how this affects the foreign permanent establishment exemption.

• The streamed opening negative amount for a territory is reduced each accounting period by the relevant profits amount for that territory, until it reaches nil
• In any period where such a reduction occurs, the foreign PE profits exemption does not apply to the relevant profits amount used in the matching
• In the final period of matching, the exemption is only denied to the extent of the remaining streamed opening negative amount at the start of that period, with any excess profits remaining exempt
• The company may specify in its tax return for the final matching period which part of the relevant profits amount retains the benefit of the exemption