Corporation Tax Act 2010 section 116

The EEA tax loss condition: companies not resident in EEA territory

Section 116 identifies the EEA amount for companies that are not resident in an EEA territory but have a permanent establishment there, and sets out conditions under which losses from that establishment may qualify for group relief.

• This section applies to companies that are not resident in an EEA territory but operate there through a permanent establishment — EEA-resident companies are dealt with separately under section 115.
• The main condition requires that the amount in question must have arisen for tax purposes in an EEA territory through that permanent establishment.
• Any amount arising from activities whose profits would be exempt under a double taxation agreement is excluded from qualifying.
• The relevant double taxation agreements are those between the EEA territory where the permanent establishment is located and either the United Kingdom or any other territory, where the effect is that profits from the activities would be exempt from tax in that EEA territory.