Taxation (International and Other Provisions) Act 2010 section 15

Rule 7: credit for underlying tax on dividend paid to sub-10% associate

Section 15 provides a safety net allowing underlying tax credit on overseas dividends where the recipient company's voting power in the paying company has involuntarily fallen below the normal 10% threshold.

• The recipient must be a UK-resident company, or the dividend must form part of the profits of a UK permanent establishment of a non-UK-resident recipient
• The recipient (or a company of which it is a subsidiary) must control less than 10% of the voting power in the overseas paying company
• The voting power must have previously been at least 10% and the fall below that level must have been unforeseeable, unavoidable, and irremediable despite all reasonable efforts by the recipient, its parent, or any associate
• Key definitions of "associate", "parent", "relevant voting power", and "subsidiary" determine which companies and relationships are taken into account when applying this relief