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HMRC internal manual

International Manual

Non-residents trading in the UK: Treaty permanent establishment: definition

Two circumstances to consider

Under the Model Treaty, article 5, there are two broad circumstances within which either a foreign enterprise could have a UK permanent establishment or a UK enterprise could have a foreign permanent establishment. These are:

  • Where there is a fixed place of business through which the business of an enterprise is wholly or partly carried on - Model Treaty Article 5(1). This is known as the fixed place of business permanent establishment (INTM266050 to INTM266130).


  • Where an agent, other than an agent of independent status, acting on behalf of an enterprise has, and habitually exercises, in a contracting state an authority to conclude contracts in the name of the enterprise - Model Treaty Article 5(5). This is known as the deemed dependent agent permanent establishment (INTM266140 to INTM266150).

The commentary to article 5 (at paragraph 35 in the July 2010 version) makes it clear that there is no need to consider, in respect of the same profits, whether a deemed dependent agent PE exists if it is already clear that there is a fixed place of business PE.