Paragraph 8 Other provision about permanent establishments

United Kingdom

(1)

Section 232 (permanent establishments) is amended as follows.

(2)

In the heading, omit “treated as entities”.

(3)

In subsection (1)—

(a)

in the words before paragraph (a), omit “that”;

(b)

in paragraph (a), for “is located” substitute “that is situated”;

(c)

omit the “and” at the end of paragraph (a) and after that paragraph insert—

“(aa)
any profits in relation to which are reflected in the financial statements of the main entity, and”;

(d)

in paragraph (b), at the beginning insert “that”;

(4)

In subsection (2)—

(a)

in paragraphs (b) and (c), for “is in” substitute “is situated in”;

(b)

in paragraph (d), for paragraph (ii) substitute—

“(ii)
the income attributable to the place of business’s operations is exempted from tax by the territory of the main entity or, where the main entity is a flow-through entity, by the territory in which the reference entity (within the meaning of section 168) is located.”

(5)

After subsection (2) insert—

“(2A)
For the purposes of subsection (1)(a)—
(a)
section 240(2) (flow-through entities treated as stateless) is to be disregarded, and
(b)
a flow-through entity that would otherwise be a stateless entity under section 240(2) is instead treated as located in the territory in which it is created.”

(6)

At the end insert—

“(6)
See also section 232ZA (modifications that apply where legal main entity is distinct from main entity).”