What is a permanent establishment for tax purposes?

A fixed place of business includes an office, factory, workshop or branch used regularly for the company's business, and generally excludes purely preparatory or auxiliary activity such as storage or a liaison desk with no contract-making role.

Even without a physical office, a dependent agent who habitually negotiates or concludes contracts on the company's behalf in that country can create a permanent establishment, separate from the fixed place test entirely.

Once a permanent establishment exists, the host country taxes the profit attributable to it, using rules similar to a separate, independent enterprise, even though no local company was ever incorporated there.

This runs alongside the UK company's own worldwide corporation tax charge, so the same profit can end up reported, and potentially taxed, in two places before treaty relief is applied.

Our fixed monthly packages for a UK limited company start at £89 plus VAT and run to £169 and £289 plus VAT as bookkeeping, VAT, payroll and reporting are added. One-off filings are sold at fixed prices, and the Companies House fees we pay for you are charged at cost with no VAT added. Overseas owners are quoted on exactly the same published prices as UK-resident clients.

Rates, thresholds and deadlines here reflect the 2026/27 UK position and current Companies House and HMRC guidance. Check GOV.UK, or ask us, before relying on them for your own company.