There are four conditions, which must be satisfied before a loss
arising in a 75% subsidiary resident in another European Economic
Area (EEA) territory will be available for group relief in the UK,
(
CTM81510). The fourth of these is the
precedence condition.
The precedence condition denies relief for a loss under the
new rules if relief could be obtained in the territory of residence
of an intermediate company in the ownership chain.
A loss satisfies the precedence condition if it cannot be
relieved in the territory of residence of any intermediate company
in an ownership chain between a surrendering company and the UK
resident company of which it is a 75% subsidiary.
Whether a loss can be relieved in the territory of residence
of an intermediate company is determined by the laws of the
territory in question.
The precedence condition applies whatever the level of
ownership of the intermediate company by the UK resident company,
or of the surrendering company by the intermediate company.
Where the surrendering company is a 75% subsidiary of more
than one UK resident company, the precedence condition only applies
in relation to intermediate companies between the surrendering
company and the nearest such UK resident company in the ownership
chain.
There are worked examples at
CTM81610.
