Permanent estblishment

Question 1

Characteristics of an overseas PE

Answer 1

1. Profit/ Losses subject to CT
2. Double tax relief available / additional UK CT may be due
3. UK has an exemption regime that is an irrevocable election applying to all foreign PEs
   - subject to anti diversion rule
   - if loss making won’t be exempt until losses in previous 6 years have been matched with profits in subsequent periods
4. If business overseas sold the UK CT due
5. TP considerations

Question 2

Characteristics of overseas sub

Answer 2

1. Profits/loss not subject to UK CT
2. CFC regime
3. Profits can be repatriated by way of dividend which are exempt from CT (as the UK company controls the sub)
4. If sub is sold then SSE may apply
5. TP considerations

Question 3

Dependent agent PE

Answer 3

Dependent agent is a person, other than an independent agent, who acts on behalf of a company and habitually exercises in a contracting state the authority to conclude contracts in the name of the company

Question 4

What happens if something is deemed to have a UK PE

Answer 4

File UK CT returns, attributing a % of profits to the PE and pay UK CT on its profits