Taxation (International and Other Provisions) Act 2010 section 438A

Application of section 438: certain creditors treated as qualifying infrastructure companies

Section 438A sets out the conditions under which a non-UK member of a worldwide group can be treated as a qualifying infrastructure company for the purposes of the infrastructure exemption in section 438, so that interest it receives on certain intra-group loans can benefit from that exemption.

• A non-UK group company ("C") that is part of the same worldwide group as a qualifying infrastructure company can be treated as a qualifying infrastructure company itself, provided it meets certain tests
• C must pass both the public infrastructure income test and the public infrastructure assets test throughout the relevant period, with extended versions of those tests that look through holdings of shares in, or debt issued by, other companies that themselves meet or are treated as meeting those tests
• The loan on which C is the creditor must be fully funded by a corresponding loan made to C on substantially the same terms, and the income C receives on that corresponding loan must be of a type that would qualify as exempt under section 438(2)
• If C defaults on its obligations, the creditor's recourse must be limited to public infrastructure assets and income, including shares in or debt issued by companies whose own income and assets consist wholly (ignoring insignificant amounts) of such infrastructure-related items

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