Is there a UK domestic charge on the foreign principal?
One potential remedy to the shift of profits out of the UK through commissionaire structures is to argue that the principal is trading in the UK through a branch or agency and hence that the foreign company is chargeable to CT in the UK on the trading profits under ICTA88/S11. For accounting periods starting on or after 1 January 2003 the term ‘branch or agency‘ is modernised to ‘permanent establishment’ and more closely follows the defining characteristics detailed at Article 5 of the OECD Model Tax Convention. A non-resident company carrying on a trade in the UK through a branch or agency / permanent establishment, is chargeable to corporation tax. The measure of profits is the trading income arising directly or indirectly through the branch or agency / permanent establishment, together with any income from property or rights used by, or held by or for that branch or agency.
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- Is there a UK domestic charge on the foreign principal?
