Corporation Tax Act 2009 section 771

Meaning of "effective 51% subsidiary"

Section 771 defines the term "effective 51% subsidiary" for the purposes of the intangible fixed assets rules relating to groups of companies.

• A company is an "effective 51% subsidiary" of a parent company only if two conditions are both met.
• The parent must be beneficially entitled to more than 50% of any profits available for distribution to equity holders of the subsidiary.
• The parent must also be beneficially entitled to more than 50% of any assets of the subsidiary that would be available for distribution to equity holders on a winding up.
• Both the profits test and the assets test must be satisfied — meeting only one is not sufficient.