Permanent establishment meaning

Checklist This Checklist sets out the principal direct and indirect tax considerations that a corporate borrower within the scope of UK corporation tax (a UK corporate borrower) ought to assess both prior to entering into a loan and over the life of that loan... It is designed to be used as a Checklist by the tax adviser to a UK corporate borrower, offering a concise outline of the relevant tax matters and providing space for the adviser to record notes... This Checklist proceeds on the basis that: the borrower is a company within the charge to UK corporation tax in relation to the loan, that is, either a UK tax resident company or a non‑UK tax resident company for which the loan is attributable to its UK permanent establishment (a UK PE), or attributable to the non‑UK resident company’s trade of dealing in or developing UK land; and the borrower and the lender are unconnected parties dealing at arm’s length ...

This checklist highlights the principal tax considerations when handling distressed corporate debt, addressing in turn: acquisitions of non-performing loans debt restructurings (ie waivers, debt/equity swaps and renegotiations) enforcement of debts For fuller analysis of the points signposted here, see Practice Notes: Tax and distressed debt—acquisitions of non-performing loans Tax and distressed debt—debt restructurings Tax and distressed debt—enforcement actions available to creditors Acquisitions of non-performing loans This part summarises the tax considerations when a buyer takes on existing UK debt at a discount to face value: Where should the purchaser be located? will interest paid by the borrower to the purchaser be subject to withholding tax? if the purchaser is non-UK resident, can relief be obtained under a double tax treaty? to what extent will amounts received from borrowers be chargeable on the purchaser? How will the debt...

Stop Press: Section 49 together with Schedule 7 to the Finance Act 2026 revises the UK’s domestic rules concerning UK permanent establishments of overseas, non-UK companies, applying for accounting periods (for corporation tax) or tax years (for income tax) that start on or after 1 January 2026. These measures update both the meaning of a UK permanent establishment and the framework for attributing profits to such establishments so as, in each instance, to align them more closely with the OECD Model Tax Convention. This ensures the domestic position is more consistent with internationally accepted norms. Separately, Section 46 and Schedule 5 to the Finance Act 2026 scrap the DPT regime and introduce the ‘unassessed transfer pricing profits’ (UTPP) provisions, effective for accounting periods commencing on or after 1 January 2026. HMRC has published a new chapter in the International Manual setting out guidance on the UTPP rules at INTM489100. Additional practical guidance is provided there. For further detail on these updates, see News Analysis: Budget...

In this issue: International Reorganisations, restructuring and insolvency VAT Taxes management and litigation Anti-avoidance Energy and environment Key developments Employment taxes Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information International UK government announces mandatory application of the foreign permanent establishment exemption On 21 May 2026, the government released a policy paper outlining reforms to the taxation of UK-resident companies operating partly through foreign permanent establishments (PEs), making the foreign PE exemption compulsory for most businesses for accounting periods starting on or after 1 January 2027. For UK-resident companies with foreign PEs involved in activities relating to the exploration or exploitation of oil and gas, the measure will take effect from 1 September 2026. This is achieved by deeming those companies’ accounting periods to end on 31 August 2026, with the new rules applying from the next day. The policy paper indicates the...

HMRC v GE Financial Investments [2024] EWCA Civ 797 The appellant company (GEFI) was a UK-resident member of the GE group, acting as the limited partner in a Delaware limited partnership (LP). The LP’s general partner was a US-resident group entity, GEFI Inc. For US federal income tax purposes, GEFI and GEFI Inc were treated as stapled entities, since shares in one could not be transferred unless the shares in the other were likewise transferred to the same recipient. As a result of that staple, GEFI became subject to US tax on its worldwide income. It claimed UK double tax relief in respect of the US tax for six consecutive accounting periods, but HMRC rejected each of those claims. The First-tier Tax Tribunal (FTT) dismissed GEFI’s appeal, determining that it was not resident in the US under Article 4 of the US/UK double tax treaty, and that it was not carrying on a business in the US through a US permanent establishment within Article 7 of the treaty...

In this issue: Budgets and Finance Bills International Real estate tax Employment taxes Taxes management and litigation VAT Companies and corporation tax Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Budgets and Finance Bills Committee of the whole House set to consider FB 2026 clauses on 12 and 13 January 2026. As flagged in the highlights dated 18 December 2025, following the Bill’s second reading on 16 December 2025, the House of Commons referred specified elements of FB 2026 to a Committee of the whole House. That Committee will take those clauses on 12 and 13 January 2026. The Public Bill Committee, which will scrutinise the remainder of the Bill, is expected to finish its consideration by 26 February 2026. See: Finance Bill 2026 and Practice Note: Tax—Finance Bill 2026 tracker—progress through Parliament...

Many UK-resident companies are expected to operate solely within the UK, with their entire customer base and supplier network located here, so that all profits and gains arise from UK activity undertaken domestically within national borders. Nevertheless, this is not universal; for a sizeable proportion of UK companies, overall profits also comprise non-UK amounts earned from activities outside the UK...

Stop Press: Section 49 and Schedule 7 of the Finance Act 2026 revise the UK’s domestic rules on UK permanent establishments of non-UK companies, applying to accounting periods (for corporation tax) and tax years (for income tax) that start on or after 1 January 2026. The measures update both the definition of a UK permanent establishment and the methodology for attributing profits to a UK permanent establishment, each intended to align more closely with the OECD Model Tax Convention. They also adjust how the investment manager exemption operates. For further details, see News Analysis: Budget 2025—Tax analysis — International. A non-UK resident company trading in the UK may either incorporate a UK subsidiary or trade through a permanent establishment (PE), commonly a branch. This Practice Note sets out the key UK tax considerations relevant to that choice, while recognising that tax is only one of several matters to be weighed...

Trading activities test The enterprise management incentives (EMI) framework is tightly defined and imposes various conditions that must be satisfied when options are issued, covering: the company issuing the options the employees receiving the options the shares subject to the option, and the terms of the options themselves This Practice Note examines the statutory requirements for the trading activities test that a company must meet to award EMI options. It clarifies the meaning of a qualifying trade, drawing attention to pertinent HMRC guidance and practical considerations. For the EMI eligibility tests concerning a company’s independence, qualifying subsidiaries, gross assets and headcount, see Practice Note: EMIs—qualifying companies. For a decision flowchart on a company’s ability to grant EMI options, see: EMI scheme—flowchart to determine company’s eligibility. For a checklist assessing whether a company and its workforce qualify for EMI purposes, see: EMI options—checklist to determine whether a company and its employees qualify. For the remaining EMI qualifying criteria, refer to...