Economic Substance Requirement

Key requirements

The foreign disposal gains regime began on 1 January 2024. Adequate substance can exclude specified non-IP foreign asset gains from tax under this regime, while IP has different treatment. The proposed disposal should be expected within one year of the ruling application. A group application is permitted only in the stated outsourcing or holding-company/SPV circumstances and must jointly cover the relevant entities. A ruling may remain valid for up to five YAs, including the envisaged disposal YA, only while material facts, representations and law remain unchanged. Submit the ESR form, annex and applicable outsourcing agreement. The application addresses substance adequacy, not a general assurance that all foreign gains are exempt.