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HMRC internal manual

International Manual

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HM Revenue & Customs
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Non-residents trading in the UK: Treaty permanent establishment

Fixed place of business permanent establishment - geographic condition

The words used in article 5(1) make it clear that there is a geographical condition within the fixed place of business treaty permanent establishment definition. There must be a distinct place of business being used for carrying on the business of the enterprise.The place could be premises, facilities, plant or machinery or even a site or installation. But equally the place of business could consist only of a space where premises are not necessarily required for the activities concerned. For example, a street vendor or market barrow enterprise could meet the geographic place condition where the business was carried out from appreciably one place whereas a French travelling salesman arriving in the UK and trading his French produce from door to door before returning to France would not meet the geographic condition and there would be no fixed place of business in the UK. For guidance on the scope for automated machinery to constitute a permanent establishment see INTM266090.

A place of business of one enterprise could be situated in the business premises of a second enterprise, including possibly an affiliated company, if some space were put at the disposal of the first enterprise. In considering whether a place of business is ‘at the disposal of’ an enterprise it makes no difference whether that enterprise’s use is exclusive or shared, whether the enterprise owns, rents or even occupies a place illegally. As an example of when premises would be considered to be ‘at the disposal of an enterprise’, a travelling salesman would not be considered to have the premises of each of his prospective customers at his disposal, but a parent company using an office in the headquarters of a subsidiary company to oversee that subsidiary for a period would have had that office space at its disposal. Other examples can be found in the commentary to Article 5.