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What is franked investment income (FII) and does it still matter?
Published on: 26 November 2013
It is in the context of the old advance corporation tax regime that FII is most often referred to, not least because of the very long running case called the FII group litigation order. However, it does continue to be relevant because it can impact on the tax rate applicable.
What is franked investment income?
A UK resident company has franked investment income (FII) if it:
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has income which consists of a distribution (for which, see: Scope of distributions for tax purposes), and
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is entitled to a tax credit in respect of that distribution
A UK resident company is entitled to a tax credit if the distribution in question is:
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a qualifying distribution (which is broadly any distribution, whether made by a UK or non-UK resident company, other than certain distributions connected with the issue of redeemable shares or securities, for which, see: Paragraphs C and D—Redeemable share capital and securities), and
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exempt from tax under the rules in Corporation Tax Act 2009, Part 9A (for which
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Jurisdiction(s):
United Kingdom
Related legal acts:
Key definition:
Investment definition
What does Investment mean?
An investment will typically mean any type of property or interest held within the territory of the host state. This will often extend far beyond 'obvious' property, such as real estate or shares in a local company, to (depending upon the circumstances) other interests such as rights under a contract, intellectual property rights and private loans. As with the concept of 'investor,' in the modern commercial world what does and does not qualify as investment can be a complex question. The definition of 'investment' will vary between BITs.
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