Corporation Tax Act 2009 section 18N

Residual opening negative amount: "matching"

Section 18N explains how a company's unstreamed (residual) opening negative amount is gradually reduced by matching it against subsequent residual aggregate relevant profits, and the tax consequences of that matching process.

• The residual opening negative amount is the total opening negative amount less any amounts already allocated to specific territories through streaming; it is progressively reduced each period by residual aggregate relevant profits until it reaches nil.
• The residual aggregate relevant profits amount for a period is the company's total relevant profits for that period, minus any profits already used to reduce streamed opening negative amounts.
• In any period where a reduction takes place, the foreign permanent establishment exemption does not apply to the residual aggregate relevant profits — except in the final matching period, where exemption is only lost to the extent of the residual opening negative amount remaining at the start of that period.
• In the final matching period the company may specify in its tax return which particular components of the residual aggregate relevant profits amount should lose exemption and which should retain it.