Foreign ‘branch’ exemption ― overview

Produced by Tolley in association with Anne Fairpo
Foreign ‘branch’ exemption ― overview

The following Corporation Tax guidance note Produced by Tolley in association with Anne Fairpo provides comprehensive and up to date tax information covering:

  • Foreign ‘branch’ exemption ― overview
  • Chargeable gains
  • Anti-avoidance
  • Transitional rules where overseas losses relieved against UK profits

The UK provides an elective exemption from UK corporation tax for the profits of an overseas permanent establishment (PE) of a UK company (other than certain insurance companies). The term ‘permanent establishment’ is used in UK tax law to refer to those overseas operations of a company which were previously described as a ‘branch’.

Where an election is made under these rules, the profits and losses of all of a UK company’s PEs will be exempt from UK corporation tax.

The calculation of the amount of exempt profits and losses is not straightforward. The calculation initially follows the rules in Article 7 of the OECD Model Tax Treaty (or where the UK has a treaty in place with the relevant jurisdiction, the equivalent rules in that treaty) to determine the initial attributable profits or losses. Chargeable gains are included and notional capital a

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