INTM215120 - Controlled Foreign Companies: before CTSA

Notice of direction: residence in more than one territory

ICTA88/S749 (2) and (4)

The rule in ICTA88/S749 (1) that a company is resident in the territory in which it is liable to tax by reason of domicile, residence or place of management may in some cases result in a company being resident in more than one territory. For example, a company may be liable to tax in one territory because it was incorporated there and in another because it is managed there. ICTA88/S749 (2) provides that the following rules will apply in determining which of the territories is to be regarded as the territory of residence for the purposes of Chapter IV:

1. If throughout the accounting period the company's place of effective management is situated in only one of the territories, that is the territory of residence - ICTA88/S749 (3)(a).
2. If throughout the accounting period the place of effective management is situated in two or more of the countries, the one in which the greater amount of the company's assets is situated at the end of the relevant accounting period is the territory of residence – ICTA88/S749 (3)(b).
3. If neither (a) or (b) above applies (for example, because the company's place of effective management is outside the countries in which it is liable to tax by reason of domicile, residence or place of management) the territory of residence is the country of residence in which the greater part of the company's assets is situated at the end of the accounting period – ICTA88/S749 (3)(c).

Where none of (a) to (c) produces a single territory of residence the territory of residence is that shown in the Board's direction under ICTA88/S747 (1). ICTA88/S749 (2)(d) refers. See INTM215110.

See INTM202050 for guidance on how the territory of residence is determined under CTSA where a company is resident in more than one territory.