CFC rules—chapter 5 non-trade finance gateway

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Published by a LexisNexis Tax expert
Practice notes

CFC rules—chapter 5 non-trade finance gateway

Copyright © 2025 LexisNexis

Published by a LexisNexis Tax expert

Practice notes
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This Practice Note deals with the controlled foreign company (CFC) Rules that apply for Accounting periods of CFCs starting on or after 1 January 2013.

As explained in Practice Note: meaning of Gateways, a CFC tax charge only arises if Profits pass through the CFC charge gateway. A CFC's assumed total profits (ATP) only pass through the CFC charge gateway if they pass through the initial chapter 3 gateway and/or one of the gateways in chapters 4–8 of Part 9A of the Taxation (International and Other Provisions) Act 2010 (TIOPA 2010).

When does the chapter 5 non-trade finance gateway need to be considered?

The detail of the main chapter 5 gateway on non-trade finance profits (NTFP) will only need to be considered for an accounting period of a CFC if:

  1. •

    none of the entity level exemptions apply (ie the exempt period, excluded territories, low profits, low profit margin, and tax exemptions)

  2. •

    the CFC has some NTFP (explained below), and

  3. •

    the controllers of the CFC have:

    1. ◦

      chosen not to apply the initial chapter 3 gateway

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