Section 371RC | Legal and economic control: the 40% rule ^F1

(1)This section applies to a non-UK resident company (“C”) if—^F1

(a)in accordance with section 371RB(7), two persons (“the controllers”) control C, and^F1

(b)one of the controllers is UK resident and the other is non-UK resident.^F1

(2)If conditions X and Y are met, C is to be taken to be a CFC (if C would not otherwise be).^F1

(3)Condition X is that the UK resident controller has interests, rights and powers representing at least 40% of the holdings, rights and powers in respect of which the controllers fall to be taken as controlling C.^F1

(4)Condition Y is that the non-UK resident controller has interests, rights and powers representing—^F1

(a)at least 40%, but^F1

(b)no more than 55%,^F1

of the holdings, rights and powers in respect of which the controllers fall to be taken as controlling C.