What's an Active / Passive Entity?

IN: Business Savings FAQs

Passive means income derived from or is related to financial assets and investments.  Passive income includes, for example, dividends, royalties, interest, foreign currency, rental income or property gains (the precise legal definition is in the FATCA and CRS legislation).

An Active Entity may broadly be described as one where less than 50% of the entity’s gross income and assets are passive.

Example of businesses that may qualify as Active include farms, manufacturing companies, management consulting companies, and architect offices.

If you are unsure of the FATCA and CRS status of the company we would suggest you consult your tax adviser or accountant, our explanations do not constitute tax advice.

We may have reporting obligations to HMRC on accounts for passive entities.

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