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

Finance profits

Section 371VG defines two key categories of finance profits for a controlled foreign company (CFC): non-trading finance profits and trading finance profits.

  • Non-trading finance profits include amounts in a CFC's assumed total profits that would be taxable as non-trading loan relationship profits or as company distributions, plus non-trading profits from relevant finance leases
  • Trading finance profits include amounts in a CFC's assumed total profits that are trading profits derived from loan relationships, derivative contracts, company distributions, or relevant finance leases
  • Any credits or debits already accounted for in determining a CFC's property business profits must not also be counted as non-trading finance profits
  • Both definitions are subject to certain gateway and exemption provisions elsewhere in the CFC rules which may modify or restrict their scope

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