835AF Disregarded permanent establishment

Summary

This section provides the meaning for a “disregarded permanent establishment”.

Details

(1) Disregarded permanent establishment

A disregarded permanent establishment is a presence in a territory –

• which the head office territory treats as a permanent establishment,
• such that some or all of its profits or gains are not taken into account for the purposes of tax in the head office territory, and
• its profits or gains –
1. are not charged to tax under section 25 where the territory in which the permanent establishment is established is the State, and
2. are not charged to tax, under a similar provision, where the territory in which the permanent establishment is established is not the State

essentially, some or all of the profits or gains of the permanent establishment go untaxed.

(2) As this section requires the anti-hybrid rules to be applied to foreign corporate structures the terms “domestic tax” and “foreign tax” need to be modified and specifically defined for the purposes of this section.

“domestic tax” means a tax chargeable on profits or gains, in the head office territory, that is similar to income tax, corporation tax (including a charge under Part 35B) or capital gains tax;

“foreign tax” means a tax chargeable on profits or gains, in the permanent establishment territory, that is similar to income tax, corporation tax (including a charge under Part 35B) or capital gains tax.

Relevant Date: Finance Act 2021