Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Trusts, Settlements and Estates Manual

From
HM Revenue & Customs
Updated
, see all updates

Non-resident trusts: residence rules: professional trustees not resident in the UK - treaty issues

Most UK treaties contain a permanent establishment threshold (Article 5 in the OECD Model) for taxing business profits of a non-resident. This applies to both corporate and non-corporate trustees. Although permanent establishment is generally relevant to corporate trustees, and branch and agency to non-corporates, where trustees are residents of a treaty country (and the treaty contains a permanent establishment threshold) then effectively that is the standard that needs to be met in the case of all trustees, non-corporate as well as corporate. This means that for treaty countries broadly the same considerations for permanent establishment as set out in the guidance will apply in the case of non-corporates. This includes the independent agent exemption outlined below.

Thus, where a treaty exists between the UK and the country in which the trustee is resident the permanent establishment article needs to be satisfied for the trustee to be treated as UK resident for the purposes of the trustee residence rules.

TSEM10070 outlines in more detail how the OECD Commentary interprets Article 5. For example, in this context for there to be a permanent establishment Article 5 usually requires the trustee to operate from a fixed place of business for more than six months.