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HMRC internal manual

International Manual

Controlled Foreign Companies: exemptions - excluded countries: Inclusion of non-local source income in permanent establishment income

SI1998/3081 Regulations 5(3)(e) and 6(1)(a)

Where the rules do not allow permanent establishment income to be treated as local source income, the income of the permanent establishment must be included as non-local source income for the purpose of the 10% test. The amount to be included is the net amount of permanent establishment income and gains unless SI1998/3081 regulation 6(3) applies (net income is less than gross non-local source income). See example 3 at INTM254590.