Corporation Tax Act 2009 section 32

Restriction on deductions: interest or other financing costs

Section 32 restricts a UK permanent establishment from deducting interest or other financing costs paid to other parts of its non-UK resident parent company, with an exception for financial businesses.

• A permanent establishment cannot deduct interest or financing costs paid to other parts of the same non-UK resident company.
• An exception applies where the permanent establishment carries on a financial business and the borrowing arises in the ordinary course of that business.
• Financial business includes banking, deposit-taking, money-lending, debt-factoring, and similar activities.
• Dealing in commodity or financial futures also qualifies as a financial business for the purposes of this exception.