UK tax treaties generally mean that business profits from a foreign enterprise are taxable in the UK only where the enterprise profits are attributable to a UK permanent establishment (PE).

The UK broadly follows the OECD model treaty definition of a PE, however the rules do differ in some areas – we can guide you when looking into this. The UK has also introduced new anti-fragmentation rules to prevent businesses artificially splitting up activities in order to avoid creating a PE.

Whether you have a UK construction site, a few workers in the UK with limited authority, or more substantial UK operations, it is critical to fully understand the activities as a whole and determine whether a UK PE has been created. Transfer pricing principles will then need to be applied to ensure an appropriate level of profit is attributed to the UK PE.

Looking for something else?

Head back to Corporate income tax or see all the services we offer.

Want to find out more?

Speak to our team and find out how we can get you up and running for your next venture in the UK.

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