CFM20475 - Securitisation: taxation: periods beginning on or after 1 January 2007: the regulations: ‘retained profit’: dividends received

Dividends received

The question may arise as to whether dividends received by a securitisation company are included in its ‘retained profit’. This will depend on the terms of the relevant capital market arrangement and of any related transactions. Generally speaking, if the company is required to apply dividends received (along with other available funds) in accordance with the company's ‘cash management’ provisions, the company's ‘retained profit’ will be based on the profit retention provided for in the cash management provisions.

In that case, the ‘retained profit’ will not be specifically attributable to, or increased by, the amount of the dividends as such. On the other hand (again, generally speaking), if the company is not required to apply dividends received in any particular way, the amount of the dividends received will as such comprise or be added to the company's retained profit. In the latter case, the securitisation company will be taxed on the amount of the dividends received, unless they are received from another securitisation company.