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

The basic rule

Section 371KB sets out the four conditions that must all be satisfied for the excluded territories exemption to apply to a controlled foreign company's accounting period.

• The CFC must be resident in a territory that HMRC has designated as an "excluded territory" by regulations for the relevant accounting period.
• The CFC's combined income falling within four specified categories (A, B, C and D) must not exceed a prescribed threshold amount for the accounting period, with any overlapping amounts counted only once.
• The intellectual property (IP) condition must be met for the accounting period.
• The CFC must not, at any time during the accounting period, be involved in an arrangement whose main purpose (or one of whose main purposes) is to obtain a tax advantage for any person.