UK Fact-File Part 2:
Individual Business Domestic Taxation

2.2 UK Permanent Establishment

A company is generally assumed to have a permanent establishment in the UK where it has a geographic place of business (premises or a site, or machinery or equipment used in the operation of a business), which is fixed, or has a degree of permanence; this is referred to as a fixed place of business permanent establishment.

Where the business is that of a non-resident, a permanent establishment is also assumed to be in place when, according to HMRC, “…an agent, other than an agent of independent status, acting on behalf of an enterprise has, and habitually exercises, in a contracting state an authority to conclude contracts in the name of the enterprise “. This is known as the deemed dependent agent permanent establishment

As a general rule of thumb, if a place of business exists for less than six months, it may not be deemed to be a permanent establishment – longer than that and it is likely to be classed as such by HRMC.

Also, where business activities at a particular location are of a recurrent nature, even though lasting six months or less each time, a permanent establishment may be deemed to have been created. The status of businesses that run websites and conduct business by e-commerce is less clear as the website server(s) may be located in another country, making it difficult to define the geographic place of business.

Broadly, the UK's rules for determining the existence of a Permanent Establishment follow those of the OECD, which are extensive and have been frequently revised over the years.