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UK company and branch in EU

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An UK based LTD company has opened a ''branch'' in Hungary. Its director has 100% of the shares.

The Hungarian entity has been registered as a branch according to their incorporation documents. The shareholding is however 99% the director of the UK company and 1% a Hungarian national. 

The Hungarian branch has made losses and they have decided to close it. The UK company has lent money to the Hungarian branch (about 23k GBP) .

I have researched to see if it would be possible to transfer those losses against the profits of the UK company. We are aware that the losses of a branch can be transferred to the mother company but in this case i am not sure whether the shareholding of the Hungarian company makes a difference or not.

I have come across CTM 81505 in the HMRC internal manual which says the main shareholder should have been the UK company instead. I am not sure if it applies or not.

https://www.gov.uk/hmrc-internal-manuals/company-taxation-manual/ctm81505

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27th Mar 2019 11:06

The entity in Hungary has a common shareholder but is not a member of the same group. Therefore you can't group relieve the losses

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