Taxation (International and Other Provisions) Act 2010 section 14

Rule 6: credit for underlying tax on dividend paid to 10% associate of payer

Section 14 sets out the conditions under which unilateral credit relief is available for underlying overseas tax on a dividend paid by a foreign company to a UK-connected recipient that holds a significant voting stake in the payer.

• The dividend must be paid by a company ("P") resident in an overseas territory, and the recipient must be either a UK-resident company or a non-UK company whose permanent establishment in the UK includes the dividend in its profits.
• The recipient must directly or indirectly control at least 10% of the voting power in the paying company, or be a subsidiary of a company that does.
• A company counts as a subsidiary for these purposes if another company controls, directly or indirectly, at least 50% of its voting power.
• Both conditions — the UK connection of the recipient (Condition A) and the 10% voting power threshold (Condition B) — must be met before any credit for underlying overseas tax is allowed.