Commentary

D4.116 Meaning of 'permanent establishment'

Corporate tax
Corporate tax | Commentary

D4.116 Meaning of 'permanent establishment'

Corporate tax | Commentary

D4.116 Meaning of 'permanent establishment'

The rules described in this article will not apply if different rules are included in the relevant double taxation agreement; in such a case the rules in the agreement take precedence.

The following definition of a permanent establishment applies for UK tax purposes. It is to a large extent based on the meaning in the OECD Model Tax Convention (see F1.402), but is not identical in all respects. In addition, other forms of double taxation may have slightly different definitions. In such cases, the interpretation in the particular agreement will prevail, although such interpretation cannot create a charge to UK tax which is not within the provisions described in this article.

Subject to the terms of the relevant double taxation agreement, a company has a permanent establishment in a territory if1:

  1.  

    •     it has a fixed place of business in that territory through which the business of the company is wholly or partly carried on, or

  2.  

    •     an agent acting on behalf of the company has and habitually exercises in that territory authority to do business on behalf of the company

A fixed place of business includes a place of management, a

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