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HMRC internal manual

International Manual

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

E-commerce, E-tailers, servers and internet trading

The development of e-commerce places a strain on the traditional definition of a PE in cases where the computer equipment is positioned in one territory whilst the enterprise has no personnel active in the business in that territory. The UK does not concur with other OECD Member States on whether a server of itself can constitute a fixed place of business permanent establishment. Accordingly the UK has made an observation to that effect in the commentary to the Model Treaty Article 5(1).

In the UK, we take the view that a server either alone or together with web sites could not as such constitute a PE of a business that is conducting e-commerce through a web site on the server. We take that view regardless of whether the server is owned, rented or otherwise at the disposal of the business.

Other OECD Member States take the view that a server, as distinct from mere web sites (which cannot fulfil the geographic situs condition) could constitute a PE where the equipment is in fact fixed, i.e. that in fact it is not moved and is located at a specific location for a sufficient duration to indeed become fixed (INTM266050). See also INTM263000 for place of contract in e-commerce.