Clifford Chance

The new UK diverted profits tax: will it impact your business, and will it survive legal challenge? December 2014

12 December 2014

For 120 years, foreign companies selling to customers in the UK have not been subject to UK tax on their profits unless they trade in the UK through a "permanent establishment". That is to change. The Government has published draft legislation enacting a "diverted profits tax" of considerable breadth, which will potentially apply to many foreign companies doing business in the UK, and many UK companies transacting with affiliates abroad.

We look at the scope of the proposed tax, how and when it will apply, and ask whether it is compatible with EU law and the UK's double tax treaties.

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