»Ê¹ÚÌåÓýapp

TIOPA10/S371RC

»Ê¹ÚÌåÓýapp legal or economic control tests are extended to particular cases where a non-UK resident company is controlled by a UK resident person and a non-UK resident person. This is likely to mostly apply in the case of joint ventures. »Ê¹ÚÌåÓýapp non-UK resident company is treated as a CFC if the conditions of the â€�40% ruleâ€� are met. That is, where:

• two persons (one UK resident and the other non- UK resident) taken together control the company (the controllers);
• the UK resident controller has interests, rights and powers representing at least 40% of the holdings, rights and powers by which the company is controlled; and
• the non-UK resident controller has interests, rights and powers representing at least 40% but no more than 55% of such holdings, rights and powers.

40% in this context means 40% of the measure of either legal or economic control, where more than 50% would give a person control of the non-UK resident company and refers to 40% of all the interests, rights and powers of the kind which gives the two persons in question control of the company. »Ê¹ÚÌåÓýapp fact that the rule applies only where there are two persons who together control (directly or indirectly) a non-UK resident company does not mean that it does not apply where one of those two persons has the power to control the company on their own. Where, for example, a non-UK resident controller holds 55% of a company and a UK resident controller holds the remaining 45%, the rule will apply and the company will be treated as a CFC, even though on its own the non-UK resident controller might otherwise be considered to have control of the company.