Foreign branch corporation tax exemption

A significant exemption from corporation tax is available in respect of the profits of foreign permanent establishments of UK companies, if the appropriate election is made. An election is normally effective for all accounting periods beginning after the accounting period in which it is made and it becomes irrevocable at the end of that period. It applies to the profits and losses (including chargeable gains and allowable losses) of all foreign permanent establishments of the company.

If a branch is located in a territory with which the UK has a ‘full’ double tax treaty (broadly, a treaty which includes a non-discrimination provision), the amount which is exempt is the profit attributable to that branch calculated in accordance with the terms of the treaty. Otherwise the exempt amount is calculated as if the OECD model treaty has effect. Profits derived from investment business are excluded.

More details are available in our factsheet.


Jacquelyn Kimber
Philip Parr

Related links

Foreign branch corporation tax exemption factsheet