Commentary

D4.802 Relevant profits/losses

Corporate tax
Corporate tax | Commentary

D4.802 Relevant profits/losses

Corporate tax | Commentary

D4.802 Relevant profits/losses

The relevant profits/losses that can be exempted are detailed in the legislation. These are essentially trading profits as adjusted for tax purposes. Special provisions are made for chargeable gains, capital allowances, payments subject to deduction and employee share acquisitions.

Adjustment of PE profits/losses

The relevant profits/losses that are to be left out of account are the amounts determined under the double tax treaty with the country concerned1 for the purposes of establishing the amount on which double tax credit relief would be available. If there is no such treaty, the amounts are defined by reference to the 2010 version of the Organisation for Economic Co-operation and Development (OECD) Model Convention2.

Chargeable gains

The exempt amount calculated as described above includes chargeable gains or allowable losses realised on assets held by the PE. However, in cases where the entire chargeable gain or allowable loss arising in respect of a capital asset does not fall within the scope of the exemption (for example, because the asset has not been held by the relevant PE for the entire period in which the asset has been held by the company in question) an adjustment is required in order fairly to reflect the profit or loss

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