What constitutes a UK permanent establishment in a property context?
Produced in partnership with Charles Goddard of Rosetta Tax
What constitutes a UK permanent establishment in a property context?

The following Tax practice note Produced in partnership with Charles Goddard of Rosetta Tax provides comprehensive and up to date legal information covering:

  • What constitutes a UK permanent establishment in a property context?
  • UK domestic law definition of a permanent establishment
  • Fixed place of business limb
  • Example 1
  • Example 2
  • Example 3
  • Dependent agent limb
  • Treaty definition of a permanent establishment
  • Building sites
  • Channel Islands and Isle of Man double tax treaties

This Practice Note looks at what constitutes a UK permanent establishment (PE) in the context of a trade of dealing in property. Prior to 5 July 2016 a company that traded in UK property, but which was not UK tax resident, could be subject to UK corporation tax on the profits of that trade if the trade was carried on in the UK through a PE. Whether or not a company had a PE was therefore extremely important.

From and including 5 July 2016 a company which trades or deals in UK property is subject to corporation tax in respect of profits of that trade whether or not the trade is carried on through a PE under the rules relating to profits from trading in and developing UK land. These rules were introduced to prevent non-UK resident developers from avoiding UK tax on the profits of a development by basing themselves in a jurisdiction whose double tax treaty with the UK:

  1. did not provide that a building site was a PE, and

  2. provided that residents of that territory should not be taxed on business profits arising in the UK unless there was a PE

For more detail on these rules see Practice Note: Profits from trading in and developing UK land (transactions in UK land).

A non-UK resident company which carries on a UK property business

Popular documents