A group for UK-REIT purposes can include non-resident companies,
so long as the companies meet the 75%/ effective 51% subsidiary
GREIT11025). The only company that
must be UK resident is the principal company.
The activities of the world-wide group are looked at for the Tax-exempt business Conditions and for the Balance of business Conditions (see GREIT12005. and GREIT12010). It does not matter where the companies are resident nor where their property is located.
The UK-REIT legislation divides this world-wide group into two parts, called G (property rental business) and G (residual). The first includes the world-wide property rental business of the group. The second covers all the other group activities.
Once these conditions have been met, the focus of the regime reduces to the parts of the group over which the UK has primary taxing rights. This is called the 'UK business' of the group. This includes all the activities of UK resident members of the group, together with those activities carried on the UK by non-resident members of the group.
GREIT11105 and GREIT11110 look at how the rules of the regime apply to these non-resident members of the group: i.e. those that have a taxable presence in the UK. The legislation is set out in paragraph 32 Schedule 17 FA 2006. All other non-resident subsidiaries are not covered by the regime: for example, their property rental income is not included in working out the amount out of which 90% must be distributed by the principal company under deduction of basic rate tax (the Distribution Condition).