Taxation (International and Other Provisions) Act 2010 section 371AA

Overview of Part

Section 371AA provides an overview of the Controlled Foreign Companies (CFC) regime, which imposes a tax charge on UK resident companies that have interests in certain non-UK resident companies controlled from the UK.

• A CFC charge applies to UK resident companies with interests in non-UK resident companies that are controlled by UK resident persons, and the charge is based on the CFC's chargeable profits.
• The legislation sets out a "CFC charge gateway" — a series of tests to determine which profits of a CFC (if any) are chargeable, covering areas such as UK activities, finance profits, captive insurance business, and solo consolidation.
• Various exemptions are available, including exemptions for qualifying loan relationship profits and full exemptions from the CFC charge, alongside rules for determining who holds relevant interests and how chargeable profits and creditable tax are apportioned.
• The CFC rules do not affect the separate corporation tax liability of a non-UK resident company that is already within the UK charge to corporation tax (for example, through trading via a UK permanent establishment).