Taxation (International and Other Provisions) Act 2010 section 371IA

The basic rule

Section 371IA sets out the basic framework for claiming exemptions on certain loan relationship profits of a controlled foreign company (CFC) that would otherwise be caught by the CFC charge on non-trading finance profits.

• This chapter applies where a CFC has non-trading finance profits that include qualifying loan relationship profits and the CFC meets the business premises condition
• A UK chargeable company can make a claim so that qualifying loan relationship profits only pass through the CFC charge gateway to the extent they are not exempt under this chapter
• Qualifying loan relationship profits are those arising from the CFC's qualifying loan relationships that relate to capital investment from the UK but are not attributable to UK activities
• The extent of exemption is determined first by applying either the full exemption or the 75% exemption to each qualifying loan relationship, and then by applying the matched interest rule if relevant

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