Corporation Tax Act 2009 section 576

Derivative contract

Section 576 defines when a company's contract qualifies as a "derivative contract" for corporation tax purposes by setting out three conditions that must all be satisfied.

• The contract must be a "relevant contract" — one that derives its value from underlying subject matter affected by changes in market prices or other factors
• The contract must meet accounting conditions — either being treated as a derivative or financial asset/liability under relevant accounting standards, or having underlying subject matter within certain specified categories
• The contract must not be excluded by rules that remove certain contracts from scope, particularly those whose underlying subject matter is land or shares
• Certain other contracts, such as those relating to holdings in OEICs, unit trusts or offshore funds, and associated transactions, may also be treated as derivative contracts under additional provisions