I have a UK limited company, which is fully owned and managed by me, who lives outside of the UK (i.e. Australia). I understand that a permanent establishment (PE) would be created in Australia. Would the UK limited company still be taxed in the UK and then double taxation relief claimed in Australia, or would I claim an Australian PE with nil profits in the UK under the double tax treaty? To confirm, it is not a property company, and there are no UK employees in the short term.
Arthur Weller replies:
Since the company is a UK company, it will have to pay UK corporation tax on its worldwide profits. If it is also going to be taxed in Australia, due to their tax rules, then you will have to claim double tax relief. Maybe you should consider running your business through an Australian company.
This question was first printed in Business Tax Insider in August 2017.