MTT18010 - Scope: Determining location of entities: Overview

An entity is located in a territory for MTT purposes if it is tax resident in that territory on the basis of place of management, place of creation, or similar criteria.

See MTT18040 for guidance on the meaning of “place of creation”, and INTM120000+ for guidance on criteria for residence of companies including place of management.

See MTT18030 for special rules on determining the location of flow-through entities and permanent establishments.

This is set out in Sections 239 of Finance (No.2) Act 2023.

Entity not tax resident in any territory

If an entity is not tax resident in any territory, it is deemed to be located in the territory in which it was created.

Entity tax resident in multiple territories

If an entity is tax resident in multiple territories, a tie-breaker applies to locate the entity in a single territory (see MTT18020).

Stateless entities and stateless members

An entity is a stateless entity if:

  • the entity:
    • is determined to be tax resident in multiple territories for MTT purposes,
    • is not determined to be located in a single territory as a result of tie-breakers (see MTT18020), and
    • is not the ultimate parent of the group,
  • the entity is a flow-through entity that is not a responsible member (see MTT18030), or
  • the entity is a permanent establishment under section 232(2)(d) of the Act (see the fourth definition in MTT10130).

A stateless entity is treated as not being located in any territory for MTT purposes, in accordance with section 239(7)(a) of the Act.

Where a stateless entity is a member of a group, it is treated as being located in its own separate notional territory, in accordance with section 132(3)(b) of the Act.

There is therefore no jurisdictional blending between stateless entities. Each entity will perform a separate calculation to determine the top-up tax charge.

A stateless member is not able to access the transitional safe harbour (see MTT15920).

Change of territory

If the location of an entity changes during an accounting period, it should be treated as located in the territory that it was located in (or treated as being located in) at the start of the period.

Flow through entities and permanent establishments

Special rules apply when determining the location of flow through entities or permanent establishments (see MTT18030).