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HMRC internal manual

International Manual

Non-residents trading in the UK: Treaty permanent establishment: fixed place of business permanent establishment

Features of fixed place of business PE

One of the two circumstances in which there can be a treaty permanent establishment is where there is a fixed place of business in one treaty partner’s territory through which the business of an enterprise resident in the other treaty partner’s territory is wholly or partly carried on - Model Treaty Article 5(1).

This definition therefore contains the following essential features, all of which must be present:

  1. there must be a geographic place of business, possibly premises or a site, although it can, in certain circumstances, be machinery or equipment.
  2. the place of business must be fixed, that is, have a certain degree of permanence, and
  3. the non-resident’s business must be carried on through this fixed place of business, normally by the personnel of the enterprise.

It is possible for an enterprise to have more than one fixed place of business permanent establishment if it carries on business activities from more than one place for the necessary duration of time. In line with the Model Treaty, the PE articles in most of the UK’s treaties include separate paragraphs describing places of business that will especially be included or excluded from being PEs. And there is usually a separate paragraph concerning the circumstances in which a building site or construction or installation project can constitute a PE. Further guidance on these aspects is included at INTM266060 onwards.