Section 302A — Income Tax Act 2007: Meaning of “permanent establishment”

Meaning of “permanent establishment” 302A 1 This section applies for the purposes of this Chapter.

2 A company has a “permanent establishment” in the United Kingdom if (and only if)—

a it has a fixed place of business there through which the business of the company is wholly or partly carried on, or b an agent acting on behalf of the company has and habitually exercises there authority to enter into contracts on behalf of the company.

3 For the purposes of this section “ fixed place of business ” includes (without prejudice to the generality of that expression)—

a a place of management, b a branch, c an office, d a factory, e a workshop, f a mine, an oil or gas well, a quarry or any other place of extraction of natural resources, and g a building site or construction or installation project.

4 If the condition in subsection (5) is met, a company is not regarded as having a permanent establishment in the United Kingdom by reason of the fact that—

a a fixed place of business is maintained there for the purpose of carrying on activities for the company, or b an agent carries on activities there for and on behalf of the company.

5 The condition is that, in relation to the business of the company as a whole, the activities carried on are only of a preparatory or auxiliary character.

6 For this purpose “activities of a preparatory or auxiliary character” include (without prejudice to the generality of that expression)—

a the use of facilities for the purpose of storage, display or delivery of goods or merchandise belonging to the company, b the maintenance of a stock of goods or merchandise belonging to the company for the purpose of storage, display or delivery, c the maintenance of a stock of goods or merchandise belonging to the company for the purpose of processing by another person, and d purchasing goods or merchandise, or collecting information, for the company.

7 A company is not regarded as having a permanent establishment in the United Kingdom by reason of the fact that it carries on business there through an agent of independent status (including a broker or a general commission agent) acting in the ordinary course of the agent's business.

8 A company is not regarded as having a permanent establishment in the United Kingdom by reason of the fact that it controls a company that—

a is resident there, or b carries on business there (whether through a permanent establishment or otherwise).

9 The Treasury may by regulations amend this section.