Company: PLSAY
Filing Date: 2025-05-09
Form Type: 20-F
Source: 0001884082-25-000012
Chunk: 269

Company: Polestar Automotive Holding UK PLC
Filing Date: 2025-05-09
Form: 20-F
Item: Item 10
Chunk 269
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 Income Tax Treatment of the Company

A corporation generally is considered to be a tax resident for U. S. federal income tax purposes in the jurisdiction of its organization or incorporation. Accordingly, under the generally applicable U. S. federal income tax rules, the Company, which is incorporated under the laws of England and Wales, would be classified as a non-U. S. corporation (and, therefore, not a U. S. tax resident) for U. S. federal income tax purposes. Section 7874 of the Code provides an exception to this general rule (more fully discussed below), under which a non-U. S. incorporated entity may, in certain circumstances, be treated as a U. S. corporation for U. S. federal income tax purposes. These rules are complex, and there is limited guidance regarding their application.

Under Section 7874 of the Code, a corporation created or organized outside the United States ( i. e., a non-U. S. corporation) will nevertheless be treated as a U. S. corporation for U. S. federal income tax purposes (and, therefore, as a U. S. tax resident subject to U. S. federal income tax on its worldwide income) if each of the following three conditions are met: (i) the non-U. S. corporation, directly or indirectly, acquires substantially all of the properties held directly or indirectly by one or more U. S. corporations (including through the acquisition of all of the outstanding shares of a U. S. corporation); (ii) the non-U. S. corporation’s “expanded affiliated group” does not have “substantial business activities” in the non-U. S. corporation’s country of organization or incorporation and tax residence relative to the expanded affiliated group’s worldwide activities (this test is referred to as the “substantial business activities test”); and (iii) after the acquisition, the percentage of the shares of the non-U. S. acquiring corporation held by former shareholders of the acquired U. S. corporation(s) by reason of holding shares in the U. S. acquired corporation(s) (taking into account the receipt of the non-U. S. corporation’s shares in exchange for each U. S. corporation’s shares) as determined for purposes of Section 7874 of the Code (the “Section 7874 ownership percentage”) is at least 80% (by either vote or value) (this test is referred to as the “80% ownership test” and the three-prong test described