»Ê¹ÚÌåÓýapp

»Ê¹ÚÌåÓýapp controlled foreign companiesâ€� rules provide a number of general exemptions. Where none of these are available these rules provide an additional mechanism for excluding profits from apportionment to a UK company.

»Ê¹ÚÌåÓýapp rules can apply in relation to any controlled foreign company that has individuals working for it in a business establishment in another EEA state. If the controlled foreign company’s profits would otherwise have to be apportioned, the UK owners of the controlled foreign company may apply to HMRC for the company’s apportionable profits to be treated as reduced by an amount (“the specified amountâ€�) representing the “net economic valueâ€� arising to the group that is created directly by the work of those individuals.

HMRC must grant the application providing the company’s application demonstrates that the specified amount satisfies the criteria set out in the new rules. Once the UK Company’s application has been granted, the controlled foreign company’s chargeable profits and creditable tax are treated as reduced for the purposes of determining the UK company’s controlled foreign companies� charge.

»Ê¹ÚÌåÓýapp rules also provide a new “effectively managedâ€� condition in ICTA88/SCH25/PARA8 for the purposes of applying the Exempt Activities exemption to a controlled foreign company resident in another EEA state.