This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our privacy notice.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Marketing

A bit of data which remembers the affiliate who forwarded a user to our site and recognises orders from those who become customers through that affiliate.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Would a UK limited company still be taxed in the UK and then double taxation relief claimed?
I have a UK company, which is fully owned and managed by me, who lives outside the UK (i.e. Australia). I understand that a permanent establishment (PE) would be created in Australia. Would the UK 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:  
HMRC’s guidance at www.gov.uk/hmrc-internal-manuals/international-manual/intm120030 states that a dual resident company is resident in the country that has priority per the relevant double tax treaty. 
Article 4 paragraph 4 of 
www.gov.uk/government/uploads/system/uploads/attachment_data/file/496636/uk-australia-dtc_-_in_force.pdf states that in this situation the company should be considered resident only in the country in which its place of effective management is situated. In this case, this is Australia. HMRC’s International Tax manual (at INTM120030) states that a treaty non-resident company, such as in this case, is not UK resident for tax purposes (per CTA 2009, s 18). 

Note - This question first appeared in our February 2018 issue of Business Tax Insider and the answer was not quite clear. So, we are reprinting the question with a clearer answer. 

This question was first printed in Business Tax Insider in July 2018.

Tax Insider Lite

FREE tax strategies delivered to your inbox every month.

  • By clicking on the button below you agree to the terms & conditions and the privacy notice of the website.
  • Subscribe for FREE