Taxation (International and Other Provisions) Act 2010 section 59

Meaning of "relevant profits" in section 58

Section 59 defines "relevant profits" for the purpose of calculating the underlying tax credit available when a UK-resident company receives a dividend from a non-resident company under section 58.

• Where the recipient is not a small company and the dividend is treated as paid out of profits other than "relevant profits" under anti-avoidance rules in CTA 2009 section 931H, those deemed profits are the relevant profits for the credit calculation.
• Where the dividend is paid for a specified accounting period, relevant profits are the distributable profits of that period, topped up if necessary by distributable profits of earlier periods (most recent first) until the total dividend is covered.
• Where the dividend is not paid for a specified period, relevant profits are the distributable profits of the last period for which accounts were finalised before the dividend became payable, again topped up from earlier periods if the dividend exceeds those profits.
• Distributable profits means profits available for distribution per accounts drawn up under the laws of the company's country of incorporation, with no voluntary provisions for reserves, bad debts, impairment losses or contingencies beyond what local law requires.