Citation, commencement and effect

1. —(1) These Regulations may be cited as the Controlled Foreign Companies (Excluded Territories) Regulations 2012 and come into force on 1st January 2013.

(2) These Regulations have effect for accounting periods of CFCs beginning on or after 1st January 2013.

Interpretation

2. In these Regulations—

“TIOPA 2010” means the Taxation (International and Other Provisions) Act 2010;

“the Schedule” means the Schedule to these Regulations.

Excluded territories

3. A territory listed in Part 1 of the Schedule is an excluded territory for the purposes of Chapter 11 of Part 9A of TIOPA 2010 (the excluded territories exemption).

Modified excluded territories exemption to apply in specified cases

4. —(1) For the purposes of Chapter 11 of Part 9A of TIOPA 2010, the requirements of section 371KB(1)(b) and (c) of that Act do not have to be met in order for the excluded territories exemption to apply for a CFC’s accounting period if—

(a) for the purposes of that Chapter, the CFC is for the accounting period resident in—

(i) Australia,

(ii) Canada,

(iii) France,

(iv) Germany,

(v) Japan, or

(vi) the United States of America;

(b) requirement A is met (if applicable); and

(c) requirement B is met.

(2) Requirement A is applicable only if the CFC is resident as mentioned in paragraph (1)(a) by virtue of section 371TA(1)(b) of TIOPA 2010.

(3) Requirement A is that the CFC would still be resident as mentioned in paragraph (1)(a) were the following subsections to be substituted for section 371KC(3) of TIOPA 2010—

“ (3) But section 371TA(1)(b) is to be applied only if the CFC or persons with interests in the CFC are subject to taxation under the law of the territory in question on all of the CFC’s income arising during the accounting period.

(3A) For the purposes of subsection (3), the CFC’s income does not include any dividend or other distribution received, other than one for which the company paying the dividend or other distribution is entitled to a deduction against its profits for tax purposes under the law of the territory in which it is resident. ” .

(4) Requirement B is that at no time during the accounting period is the CFC’s business carried on, to any extent, through a permanent establishment which the CFC has in a territory outside the territory in which it is resident for the accounting period for the purposes of Chapter 11 of Part 9A of TIOPA 2010.

Further requirement to be met for excluded territories exemption to apply

5. For the purposes of Chapter 11 of Part 9A of TIOPA 2010, Part 2 of the Schedule specifies a further requirement which must be met in order for the excluded territories exemption to apply for a CFC’s accounting period.

Regulations 3 and 5

SCHEDULE

PART 1 Excluded Territories

PART 2 Specified further requirement

If at any time during the accounting period the CFC carries on insurance business in relation to which the CFC is regulated in any territory, none of that business is carried on in Luxembourg at that time.