Permanent Establishment

Limited Company TaxExpat & Non-Resident Tax
A 'permanent establishment' is a key concept in international tax. It refers to a fixed place of business through which a foreign enterprise carries on its activities in another country.

The existence of a permanent establishment (PE) in the UK usually determines whether a foreign company is liable to pay UK Corporation Tax.

What creates a Permanent Establishment?

A PE can be created in two main ways:

  1. A Fixed Place of Business
    This includes having a physical presence in the UK, such as:

    • A branch or office.
    • A factory or workshop.
    • A mine, oil well, or other place of extraction of natural resources.

  2. A Dependent Agent
    A PE can also be created if the company has a dependent agent in the UK who has, and habitually exercises, the authority to conclude contracts on behalf of the company.

If a foreign company has a PE in the UK, the profits attributable to that UK establishment will be subject to UK Corporation Tax.

How useful was this article?
☆
☆
☆
☆
☆

Looking for something else?

Just browsing? Return home for a list of all articles.