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HMRC internal manual

International Manual

HM Revenue & Customs
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Foreign Permanent Establishments of UK Companies: exclusions and definitions: definitions

Full treaty

A full treaty territory is a territory with which the UK has a full treaty that contains a non-discrimination article applicable to permanent establishments (see CTA09/S18R).

Relevant foreign territory

In the context of the legislation at CTA09/Ch 3A, “relevant foreign territory” means a place or a territory which has a legal status and a system of law. This is because it has to be a territory with which the UK either has a full treaty, or is a place that would be capable of entering into a treaty based on the OECD Model. The legislation links the exempt profits that relate to a relevant foreign territory to the profits that would be taken into account for that territory for credit relief purposes under TIOPA10. The wording at CTA09/S18(6)(a) is “in respect of tax paid under the law of the relevant foreign territory”. This would preclude a place that has no legal existence or jurisdiction, “a nowhere territory” such as international waters.