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HMRC internal manual

International Manual

HM Revenue & Customs
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Double Taxation applications and claims: Applicants/claimants: Construction Industry Scheme: Double Taxation Agreements

Where a company is resident in a country with which the UK has signed a Double Taxation Agreement (DTA) it is possible that it is entitled to claim exemption from UK tax on income earned inside the UK. This happens when the company’s UK business profits are not attributable to a permanent establishment in the UK through which the company is carrying on business.

Most DTAs contain a definition of what constitutes a permanent establishment. This definition often provides that a building site or construction project counts as a permanent establishment only if it lasts longer than a stated period - usually between three and twenty four months. Where a company is working on a building site or construction project that lasts for less than the period specified in the DTA it can claim payment of any amount that is deducted from payments made to it by Contractors under the terms of the Construction Industry Scheme.