Permanent establishment Definition

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Outsourcing and tax—checklist

Outsourcing and tax—checklist There are no specific laws, including tax laws, applicable to outsourcing arrangements and no technical legal meaning of the term. Consequently, each outsourcing arrangement will be specific to its own particular facts and will raise a different mix of tax issues. This Checklist sets out the headline tax issues that should be considered in relation to a contractual outsourcing. For the purposes of this Checklist, it is assumed that: • the contractual outsourcing arrangement is a direct supply of services from a third-party service provider to a customer • both the supplier and the customer are corporate entities, and • both the supplier and the customer are resident in the UK, other than in the final section on cross-border tax issues The Checklist is split into the following three sections: • setting up outsourcing arrangements • operating outsourcing arrangements, and • cross-border outsourcing arrangements This Checklist should be read in conjunction with the following Practice Notes: • Outsourcing—general tax issues, and • Outsourcing...

Direct tax treatment of owning UK commercial property—table

Direct tax treatment of owning UK commercial property—table This Table provides an overview of the direct tax treatment (ie corporation tax, income tax or capital gains tax treatment) of owning freehold or leasehold commercial property in the UK. Specifically, it sets out how UK tax resident, and overseas resident, companies and individuals that directly hold UK property are taxed in relation to rental income and sale proceeds depending upon whether they hold such property as an investment or for trading purposes. The table assumes that the UK property in question is commercial rather than residential property. More specifically, it assumes that the property does not comprise (or include) a single dwelling worth more than £500,000 and does not fall within the scope of the annual tax on enveloped dwellings (ATED). For more details on ATED, and the rules that subject both UK and non-UK resident companies to UK capital gains tax on the disposal of such a dwelling prior to 6 April 2019 held as an investment, see...

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Subsidiary versus permanent establishment

Forthcoming change: In June 2023, HMRC opened a consultation on the ‘Reform of UK law in relation to transfer pricing, permanent establishment (PE) and Diverted Profits Tax (DPT)’. A summary of responses was published on 16 January 2024. For more information about the consultation, see News Analysis: TAMD 2023—consultation on reform of permanent establishment rules.On 28 April 2025, the government opened a consultation on draft legislation reforming the UK’s PE rules to (i) align the domestic legislation dealing with the attribution of profits to PEs with the latest OECD documents and interpretation of the ‘separate enterprise principle’, (ii) update the domestic definition of a dependent agent PE in line with the 2017 version of the OECD Model Tax Convention, (iii) amend the scope of the investment manager exemption, (iv) align the domestic treatment of gains attributable to PEs with the 2017 version of the OECD Model Tax Convention, and (v) make consequential amendments to ensure that PE principles are consistently replicated across UK tax legislation. The draft legislation does not...

How is a UK permanent establishment taxed?

Forthcoming change: In June 2023, HMRC opened a consultation on the ‘Reform of UK law in relation to transfer pricing, permanent establishment (PE) and Diverted Profits Tax (DPT)’. A summary of responses was published on 16 January 2024. For more information about the consultation, see News Analysis: TAMD 2023—consultation on reform of permanent establishment rules.On 28 April 2025, the government opened a consultation on draft legislation reforming the UK’s PE rules to (i) align the domestic legislation dealing with the attribution of profits to PEs with the latest OECD documents and interpretation of the ‘separate enterprise principle’, (ii) update the domestic definition of a dependent agent PE in line with the 2017 version of the OECD Model Tax Convention, (iii) amend the scope of the investment manager exemption, (iv) align the domestic treatment of gains attributable to PEs with the 2017 version of the OECD Model Tax Convention, and (v) make consequential amendments to ensure that PE principles are consistently replicated across UK tax legislation. The draft legislation does not...

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Tax disclosure—bond issue offering document

United Kingdom Taxation General The summary set out below describes certain taxation matters of the United Kingdom based on the Issuer’s understanding of current law and HM Revenue & Customs (HMRC) published practice as at the date of this document, both of which are subject to change, possibly with retrospective effect. The summary is intended as a general guide only and is not intended to be, nor should it be construed to be, tax or legal advice. The summary applies only to persons who are the absolute beneficial owners of Bonds, who hold their Bonds as investments and who are resident and, in the case of individual shareholders, domiciled in the UK for taxation purposes at all relevant times. In particular Bondholders holding their Bonds through a depositary receipt system or clearance service should note that they may...

Election under CTA 2009, s 792 to reallocate intangible fixed asset degrouping charge to another member of a group

Election under CTA 2009, s 792 to reallocate intangible fixed asset degrouping charge to another member of a group [Letterhead] [Addressed to HMRC Officer] [Date] We hereby jointly elect pursuant to section 792 of the Corporation Tax Act 2009 (CTA 2009) for [the whole OR [insert a specific amount, a percentage or a fraction]] of the chargeable realisation gain accruing on the deemed realisation and reacquisition of the intangible assets to be treated as accruing to [full company name] (Company B) rather than [full company name] (Company A). For the purpose of this notice: intangible assets • means [details]; deemed realisation and reacquisition • means the deemed realisation and reacquisition of the intangible assets pursuant to section [780 OR 785] of CTA 2009 in consequence of [insert details of event leading to Company A leaving the group, eg sale of shares pursuant to a share purchase agreement between X and Y dated [insert date]]; relevant group • means, in accordance with section [792(3)(a) OR 792(4)(a)] of...

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How does Article 15 of the Organisation for Economic Co-operation and Development Model Tax Convention apply to tax the remuneration of an individual who is a ‘member of the regular complement of a ship or aircraft operated in international traffic’?

How does Article 15 of the Organisation for Economic Co-operation and Development Model Tax Convention apply to tax the remuneration of an individual who is a ‘member of the regular complement of a ship or aircraft operated in international traffic’? If a person that is tax resident in one state (State A) is subject to tax in another state (State B) under the tax law of State B, that person may be entitled to relief (in whole or in part) from double taxation under an applicable double tax treaty (DTT). A DTT allocates taxing rights between the states. The majority of DTTs are based on the Organisation for Economic Co-operation and Development Model Tax Convention (the OECD model). The OECD model has extensive commentaries that provide guidance on how each article should be interpreted. For more information about DTTs and how to interpret them, see Practice Notes: What are double tax treaties? and Principles of interpretation of double tax treaties. DTTs are also subject to detailed anti-avoidance provisions which should...

Where a UK limited parent company has a wholly owned subsidiary, however the subsidiary is a Swiss registered company trading in Switzerland only, will the group still meet the enterprise management incentives (EMI) requirements to allow the parent to grant EMI qualifying share options?

Where a UK limited parent company has a wholly owned subsidiary, however the subsidiary is a Swiss registered company trading in Switzerland only, will the group still meet the enterprise management incentives (EMI) requirements to allow the parent to grant EMI qualifying share options? Generally, in order for a company to qualify to grant enterprise management incentives (EMI) share options, it has to satisfy the following tests at the time of grant of the options: • independence test • qualifying subsidiary test • gross assets test • number of employees test, and • trading activities test For further details on each test, see: • Practice Notes: EMI—qualifying companies, EMI—trading activities • EMI scheme—flowchart to determine company's eligibility • Precedent: Enterprise management incentives (EMI) qualification questionnaire, which is also very useful to help determine which companies qualify to grant EMI share options This answer assumes that the EMI options are intended to be granted by the parent company and that the parent company meets all other eligibility...

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Tax weekly highlights—19 June 2025

This week's edition of Tax weekly highlights includes: (1) News Analyses on the FTT decisions in Eastern Power Networks, Moffat and Performance Leads, (2) HMRC’s new guidance on cost contribution agreements under the advance pricing agreement programme, (3) HMRC’s direction extending the deadline for making a final VAT return, (4) HMRC’s change of policy on VAT deductions in relation to the management of pension funds, and (5) HM Treasury’s policy paper on ‘Tax policy making principles’.

Tax weekly highlights—5 June 2025

This week's edition of Tax weekly highlights includes: (1) the UT decision in Nellsar on valuation, (2) the UT decision in Murphy on the validity of enquiries into share loss relief, (3) News Analysis on the FTT decision in Eyre on entrepreneurs’ relief, and (4) News Analysis on the UT decision in Scatola on the validity of enquiries into an SDLT avoidance scheme.