Jurisdiction(s):
United Kingdom

Key definition

UK permanent establishment definition

What does UK permanent establishment mean? In practice, a UK permanent establishment describes when a non‑UK resident company has a sufficiently fixed UK business presence, or a dependent agent here, so that part of its business is treated as carried on in the UK for corporation tax purposes. UK tax legislation (CTA 2009) defines a permanent establishment as either: (1) a fixed place of business in the UK through which the company’s business is wholly or partly carried on (for example, a place of management, branch, office, factory, workshop or certain resource‑extraction sites); or (2) a person acting on its behalf who has, and...

UK permanent establishment: domestic law, DTT interaction, exclusions, agency/fixed place tests, anti-fragmentation, OECD BEPS divergences, Finance Act 2026 changes, servers and service PEs

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Practice notes

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Section 49 and Schedule 7 of the Finance Act 2026 revise the UK’s domestic Rules concerning UK permanent establishments of non‑UK companies, taking effect for accounting periods (for corporation tax purposes) or tax years (for income tax purposes) beginning on or after 1 January 2026. The changes update the definition of a UK permanent establishment and the provisions dealing with the attribution of Profits to a UK permanent establishment, in each case aiming to bring the position more closely into line with the OECD Model Tax Convention. They also modify how the investment manager exemption operates. For further information, see News Analysis: Budget 2025—Tax analysis — International.

This Practice Note explores the concept of a permanent establishment (PE) for tax, under UK domestic law and within double tax treaties (DTTs). A company that is not UK‑resident but conducts a trade in the UK through a UK PE is liable to corporation tax on the income and on the chargeable gains that are attributable to that PE. Accordingly, it is important to be able to identify the point at which a non‑UK resident company’s activities and presence in the UK will amount to a PE...

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Web page updated on 21/05/2026

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