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The UK Finance Act 2019, which became law on February 12, includes the legislation required to update UK domestic law to align with the UK’s position on the changes to the Permanent Establishment (PE) definition arising from the OECD’s Base Erosion and Profit Shifting (BEPS) project and included within the Multilateral Instrument (MLI).  This effectively expands the definition of PE in the UK which - together with forthcoming changes to many double tax treaties - is likely to result in more PEs arising.

Any business that is relying on Article 5(4) exemptions of the OECD's Model Tax Convention to assert that it does not currently have a UK PE should review its situation carefully to understand whether the activities of a closely related party in the UK would mean its ability to rely on these exemptions has ceased and it should be filing corporation tax returns in the UK from January 1, 2019.