Permanent Establishments “PE” – Non-resident companies & UK taxation
Posted on 18th July 2021
Many businesses have a place of origin in one territory but operate in other territories which can include an international presence from an employee or director perspective.
A non-resident company will be regarded as having a permanent establishment in the UK if;
It has a fixed place of business here through which the business of the company is wholly or partly carried on, or
an agent acting on behalf of the company has and habitually exercises here authority to do business on behalf of the company. (As long as that agent is not of independent status acting in the ordinary course of his business).
In practice this can be where a business has a rental space or office, a fixed address, bank account or other physical presence. If an employee travels to that jurisdiction and conducts key business or carries out an activity that results in certain trading income on behalf of the parent company this will also trigger the parent company to have a permanent establishment in place.
In order to determine the UK reporting requirements and tax consequences of a PE existing in the UK, reference must be made to any tax treaty that exists between the UK and the relevant home country.
The existence of a PE can relate to whether withholding tax is required to be withheld and domestic payroll reporting for certain staff who are resident in the UK. Please contact our tax team for further assistance.
Questions or queries?
Please do let us know if you have any questions or if you need any further help understanding the rules. – please call us on 01932 564098 or message us here.
Information correct at time of publication
This article was produced in July 2021 – please always check with Fuller Spurling that information is current, up to date and applicable to your situation.
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