Income Tax (Trading and Other Income) Act 2005 section 761

Meaning of "25% associates"

Section 761 defines what it means for two companies to be "25% associates" of each other, which is one of the conditions that must be met for certain interest and royalty payments to qualify for exemption under section 758.

• Two companies are 25% associates if one directly holds at least 25% of the voting rights in the other company.
• Two companies are also 25% associates if a third company directly holds at least 25% of the voting rights in both of them.
• The 25% voting rights test must be met by direct holdings — indirect or aggregated holdings through chains of companies do not count.
• This definition supports the exemption for certain cross-border interest and royalty payments between associated EU companies under section 758.