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HMRC internal manual

International Manual

From
HM Revenue & Customs
Updated
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Foreign Permanent Establishments of UK Companies: anti-diversion rule: Entity Exemption Approach

This applies for relevant accounting periods beginning on or after 1 January 2013.

Entity Exemptions

The second approach is to apply the entity exemptions contained in Chapters 11 to 14 of the CFC regime (TIOPA10/Part9A) in the context of foreign PEs. If any of these exemptions apply to a foreign PE, then the anti-diversion rule does not apply to restrict the adjusted relevant profits amount. This entity exemption approach replicates the application of the CFC regime to non-UK resident companies, and allows the excluded territories exemption, the low profits exemption, the low profit margin exemption and the tax exemption to be applied to foreign PEs of UK companies.