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D4.403 CFCs—determining territory of residence

The definition of a CFC requires both that the relevant company is non-UK resident and that it is 'controlled' by UK residents. Accordingly, the rules outlined below are applicable in determining the residence of the company itself as well as its shareholders. It is worth noting that both corporate and individual shareholders are taken into account in determining whether a company is controlled by UK residents, even though chargeable profits of CFCs are not apportioned to shareholders that are individuals – see D4.438).

A 'territory' includes a place which may not have full independent status (such as the Channel Islands) but not individual states of a federal state (such as the USA)¹. For the purposes of determining the territory of residence of a CFC, the following rules apply²:

1. Ìý

   •ÌýÌýÌýÌý the CFC is taken to be resident in the territory where it is liable to tax by reason of domicile, residence or place of management

2. Ìý

   •ÌýÌýÌýÌý if the above bullet does not determine a territory and the company