There are several bear-traps for a foreign company proposing to do business in the UK other than through a UK establishment, including three tax regimes introduced during the last five years. Does the foreign company have a UK permanent establishment and, if not, could it be caught by the diverted profits tax’s ‘avoided PE’ rule? Does it receive income from intangibles that may be subject to the new regime taxing offshore receipts? Separately, if it provides digital services to UK users or supplies goods in the UK, it may find itself in scope of the new digital services tax or liable to UK VAT registration.
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There are several bear-traps for a foreign company proposing to do business in the UK other than through a UK establishment, including three tax regimes introduced during the last five years. Does the foreign company have a UK permanent establishment and, if not, could it be caught by the diverted profits tax’s ‘avoided PE’ rule? Does it receive income from intangibles that may be subject to the new regime taxing offshore receipts? Separately, if it provides digital services to UK users or supplies goods in the UK, it may find itself in scope of the new digital services tax or liable to UK VAT registration.
If you are not a subscriber, subscribe now to read this content.
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