Commentary

D1.1444J Joint venture qualifying infrastructure companies and groups

Corporate tax
Corporate tax | Commentary

D1.1444J Joint venture qualifying infrastructure companies and groups

Corporate tax | Commentary

D1.1444J Joint venture qualifying infrastructure companies and groups

Where a joint venture qualifying infrastructure company is owned by companies that are not all qualifying infrastructure companies, loan interest payable to those non-qualifying related parties would not be deductible for corporation tax purposes under the corporate interest restriction (CIR) regime. The reason for this is because the tax-EBITDA of the joint venture company is treated as nil (see D1.1486) giving rise to a zero interest allowance under the fixed ratio rule.

The modifications discussed below allow the joint venture company to retain the benefits of its qualifying infrastructure company status in relation to the interests held by qualifying infrastructure company investors but also ensure that it is not unfairly disadvantaged by the existence of non-qualifying investors.

This section considers the way in which the CIR legislation is modified in respect of joint venture companies that are carrying on qualifying infrastructure activities. In order for the modified treatment to apply the following conditions must be satisfied1:

  1.  

    •     one or more qualifying infrastructure companies (qualifying investors) hold shares in the joint venture company and other investors in the company who are not qualifying infrastructure companies hold the remaining

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