handbook-tb

Preventing tax treaty abuseSubdivision c) ii) also allows a company to become a “qualifiedperson” by tracing through any intermediate companies to rely uponthe status of the listed and actively traded parent company, providedall the relevant companies (the parent, the intermediary and the companyreceiving the foreign source income) are all resident in eithercontracting State.Example 5State CCompany C Ltd.Company B Ltd.100 per centShares in Company B areactively traded on arecognized stock exchangein State B40 per centB Sub 1 Ltd.60 per centB Sub 1 is not activelytraded but it is resident inState BState BB Sub 2 Ltd.B Sub 2 is a “qualifiedperson” because it is morethan 50 per cent owned byCompany B$State ACompany A Ltd.The final rule in subparagraph e) is a residual test that appliesto any “person other than an individual.” Therefore, for example, subparagraphe) could apply to:‣ ¾ An entity that is not a company — for example, a trust or partnership.The test extends beyond companies and refers to entitieswhich issue “shares” and those which issue other typesof “beneficial interest.” This may be relevant, for example, forinvestment funds and other CIVs if they are not structured ascompanies;301