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

The basic rule

Section 371TA sets out the rules for determining in which territory a controlled foreign company (CFC) is considered to be tax resident for a given accounting period.

• The primary method for determining a CFC's territory of residence is to apply the general residence rules in section 371TB, which look at where the company is effectively managed and subject to tax.
• If those general rules do not produce a clear answer and the CFC is UK-incorporated but treated as non-UK resident under a double taxation treaty, the CFC is treated as resident in the treaty partner territory.
• If neither of the above applies, the CFC is simply treated as resident in the territory where it was incorporated or formed.
• Two additional conditions elsewhere in Part 9A can override or restrict this basic rule: one requires the CFC to be liable to tax in its territory of residence to qualify for the excluded territories exemption, and the other prevents the CFC from claiming the tax exemption unless its residence can be determined under the general rules.