Corporation Tax Act 2010 section 795

Exemption of manufactured overseas dividends

Section 795 provides that a manufactured overseas dividend (MOD) is exempt from corporation tax to the extent that the real overseas dividend it represents would itself be exempt.

• A manufactured overseas dividend receives the same corporation tax exemption as the real overseas dividend it stands in for.
• If the actual overseas dividend would be fully exempt from corporation tax, the manufactured version is likewise fully exempt.
• If only part of the real overseas dividend would be exempt, the manufactured overseas dividend is exempt only to the same extent.
• This ensures that stock lending and repo arrangements do not alter the tax treatment that would have applied had the original dividend been received directly.