ARCHIVED: This Practice Note has been archived and is not maintained. This note deals only with the anti-diversion rule that has effect for accounting periods beginning before 1 January 2013. For the rule that applies to periods after that date, see: Foreign branch exemption—anti-diversion after 1 January 2013 Purpose of the anti-diversion rule The foreign branch exemption is subject to an anti-avoidance rule aimed at preventing a UK resident company from diverting profits from the UK, ie to stop a UK company that tries to ensure that its profits arise in a foreign PE (and are therefore exempt) rather than in the UK (where they would be taxable). This rule is known as the anti-diversion rule. The foreign branch exemption was introduced, alongside the interim improvements to the CFC regime, by schedule 13 to Finance Act 2011 (FA 2011). Because the foreign branch exemption was introduced during the progress of full CFC reform, the UK government considered the anti-diversion rules in the current version of the foreign branch exemption:

FORTHCOMING CHANGE: On 21 May 2026, the government published a policy paper containing plans to make the foreign branch exemption mandatory for UK-resident companies that conduct part of their business through foreign PEs and on 13 July 2026 draft legislation for the measure was published. For accounting periods beginning on or after 1 January 2027, companies will be required to calculate their total taxable profits on the basis that a foreign branch exemption election has been made. The draft legislation also includes (i) restrictions on the future use of carried-forward losses attributable to foreign PEs from periods before the new regime takes effect and (ii) a targeted anti-avoidance rule (effective from 13 July 2026) to counteract tax advantages arising from arrangements designed to accelerate losses or circumvent the commencement or operation of, or exploit shortcomings in, the new regime. This Practice Note only describes the foreign branch exemption anti-diversion rules that apply to accounting periods commencing on or after 1 January 2013. The general scope of the anti-diversion rule is explained

FORTHCOMING CHANGE: On 21 May 2026, the government published a policy paper containing plans to make the foreign branch exemption mandatory for UK-resident companies that conduct part of their business through foreign PEs and on 13 July 2026 draft legislation for the measure was published. For accounting periods beginning on or after 1 January 2027, companies will be required to calculate their total taxable profits on the basis that a foreign branch exemption election has been made. The draft legislation also includes (i) restrictions on the future use of carried-forward losses attributable to foreign PEs from periods before the new regime takes effect and (ii) a targeted anti-avoidance rule (effective from 13 July 2026) to counteract tax advantages arising from arrangements designed to accelerate losses or circumvent the commencement or operation of, or exploit shortcomings in, the new regime. This Practice Note only describes the foreign branch exemption anti-diversion rules that apply to accounting periods commencing on or after 1 January 2013. The general scope of the anti-diversion

FORTHCOMING CHANGE: On 21 May 2026, the government published a policy paper containing plans to make the foreign branch exemption mandatory for UK-resident companies that conduct part of their business through foreign PEs and on 13 July 2026 draft legislation for the measure was published. For accounting periods beginning on or after 1 January 2027, companies will be required to calculate their total taxable profits on the basis that a foreign branch exemption election has been made. The draft legislation also includes (i) restrictions on the future use of carried-forward losses attributable to foreign PEs from periods before the new regime takes effect and (ii) a targeted anti-avoidance rule (effective from 13 July 2026) to counteract tax advantages arising from arrangements designed to accelerate losses or circumvent the commencement or operation of, or exploit shortcomings in, the new regime. As explained in Practice Note: Foreign branch exemption—structure of the foreign branch exemption, the concept of the foreign permanent establishments amount (FPEA) is the key determining factor in how much profit

FORTHCOMING CHANGE: On 21 May 2026, the government published a policy paper containing plans to make the foreign branch exemption mandatory for UK-resident companies that conduct part of their business through foreign PEs and on 13 July 2026 draft legislation for the measure was published. For accounting periods beginning on or after 1 January 2027, companies will be required to calculate their total taxable profits on the basis that a foreign branch exemption election has been made. The draft legislation also includes (i) restrictions on the future use of carried-forward losses attributable to foreign PEs from periods before the new regime takes effect and (ii) a targeted anti-avoidance rule (effective from 13 July 2026) to counteract tax advantages arising from arrangements designed to accelerate losses or circumvent the commencement or operation of, or exploit shortcomings in, the new regime. Why are special rules required to deal with historic losses? As further explained in Practice Note: UK taxation of foreign profits in a UK resident company, a company can use the losses generated

FORTHCOMING CHANGE: On 21 May 2026, the government published a policy paper containing plans to make the foreign branch exemption mandatory for UK-resident companies that conduct part of their business through foreign PEs and on 13 July 2026 draft legislation for the measure was published. For accounting periods beginning on or after 1 January 2027, companies will be required to calculate their total taxable profits on the basis that a foreign branch exemption election has been made. The draft legislation also includes (i) restrictions on the future use of carried-forward losses attributable to foreign PEs from periods before the new regime takes effect and (ii) a targeted anti-avoidance rule (effective from 13 July 2026) to counteract tax advantages arising from arrangements designed to accelerate losses or circumvent the commencement or operation of, or exploit shortcomings in, the new regime. As explained in Practice Note: Foreign branch exemption—foreign permanent establishments amount there are a number of rules that must be followed in calculating the foreign permanent establishments amount (FPEA) in

For convenience, the term 'foreign charity' has been used throughout the Practice Note to mean any entity of a charitable nature which is not subject to the jurisdiction of the UK courts and cannot, therefore, qualify as a 'charity' for the purposes of the charity law of any part of the UK. For a discussion on what makes a charitable organisation for the purposes of the jurisdiction of courts in England and Wales, see Practice Note: Essentials of a charity. This Practice Note is concerned only with entities that do not qualify as 'charities' under these rules, because they are not subject to the jurisdiction of the courts of any part of the UK. Until 15 March 2023, it was necessary to distinguish between entities of a charitable nature established in other Member States of the EEA (for convenience referred to as 'EEA charities') and foreign charities established outside the EEA, as broadly speaking, gifts to EEA charities qualified for UK tax relief, whereas gifts to non-EEA foreign charities did not. The EEA comprises

Law360, London: Shifting US enforcement priorities may soon create a crisis in international anti-corruption efforts.

Foreign creditors There is no bar on a foreign creditor proving in an administration, liquidation or bankruptcy proceeding in England and Wales. Similarly, on their discharge from bankruptcy, an English debtor is released, so far as the English court is concerned, from their liability to foreign creditors. On the other hand, according to the so-called Gibbs rule in English law (based on the decision in Antony Gibbs Sons v La Société Industrielle Et Commerciale Des Métaux), a foreign proceeding designed to bring about the extinction of a debtor's obligations only discharges such liabilities as are governed by the law of the country in which that proceeding takes place unless a creditor submitted to the foreign proceeding. In Re OJSC International Bank of Azerbaijan, the Court of Appeal, by applying the Gibbs rule, refused to grant an indefinite continuation of stay under article 21 of the Cross-Border Insolvency Regulations 2006 (CBIR 2006), SI 2006/1030 that would have prevented creditors under English law debt arrangements from enforcing their rights

In accordance with UK Borders Act 2007, s 32(1) a 'foreign criminal' means a person (1) who is not a British citizen; (2) who is convicted in the United Kingdom of an offence; and (3) to whom Condition 1 or 2 applies.

This Practice Note considers the issue of bringing a claim in a foreign currency. In doing so it explains the underlying case law as to whether a claim can be brought in a foreign currency and how to bring such a claim. It also considers how a defendant can challenge a claim brought in a foreign currency. For guidance on: • interest in foreign currency claims, see Practice Note: Foreign currency claims—interest on damages claims and judgment debts • costs in a foreign currency, see Practice Note: Cross-border disputes—costs considerations Why bring a claim in a foreign currency? Bringing a claim in a foreign currency may be advantageous for claimants, particularly when dealing with claims involving complex international financial transactions. However, there are also pitfalls in bringing such a claim, especially during times when there are severe currency fluctuations. It is therefore something which needs to be carefully considered in conjunction with the client. Bringing a foreign currency claim should be considered: • in contractual claims where payments or accounts under the contract were expressed in a foreign

This Practice Note considers issues in respect of interest when dealing with foreign currency claims. It covers claiming interest when pursuing a claim in a foreign currency, considerations when the substantive law is a foreign law, as well as interest on judgment debts expressed in a foreign currency. For guidance on foreign currency claims, see Practice Note: Foreign currency claims. For guidance on foreign currency considerations for costs orders and interest on costs orders, see Practice Note: Cross-border disputes—costs considerations. For general guidance on: • interest, see Practice Notes: Claiming interest and Claiming interest—compound interest • judgment debt, see Practice Note: Interest on judgment debts Pleading interest When a foreign currency claim is being brought, interest may be claimed by reference to the foreign interest rate. For the court to apply the foreign interest rate, the rate must: • be pleaded in the particulars of claim. For guidance, see Practice Note: Claiming interest—Pleading interest in the claim form and particulars of claim, and • proved in evidence, unless agreed