Q&As

Coronavirus (COVID-19)—what is the impact of the coronavirus-related restrictions on corporate tax residence and permanent establishments?

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Produced in partnership with Martin Shah of Simmons & Simmons
Published on LexisPSL on 03/04/2020

The following Tax Q&A produced in partnership with Martin Shah of Simmons & Simmons provides comprehensive and up to date legal information covering:

  • Coronavirus (COVID-19)—what is the impact of the coronavirus-related restrictions on corporate tax residence and permanent establishments?

Coronavirus (COVID-19)—what is the impact of the coronavirus-related restrictions on corporate tax residence and permanent establishments?

Any restrictions on travel imposed by the coronavirus (COVID-19) may impact on corporate tax residency if businesses do not take care to recognise the risks.

Under UK domestic law, a foreign corporation will not be UK tax resident unless its central management and control is exercised in the UK. In accordance with case law, a company is centrally managed and controlled in the place where the highest level of control of the company takes place. This may be where its directors (or equivalent) meet and take strategic decisions. For more information on UK corporate tax residency and central management and control, see Practice Note: When a company is UK tax resident.

Many foreign incorporated entities with senior UK directors rely on holding physical board meetings outside the UK, with the UK directors travelling, in order to ensure that central management and control does not take place in the UK. But what if the UK directors are unable to travel to board meetings abroad?

With directors unable to leave the UK, or perhaps stranded outside the UK in jurisdictions other than the jurisdiction in which the foreign entity is or intends to be tax resident, care should be taken to ensure that any contingency plans put into operation for their participation in

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