Log in or register
Share on LinkedInShare on LinkedIn

ARTICLE · 18 AUGUST 2026

Exemption For Foreign Permanent Establishments To Be Made Mandatory

Travers Smith LLP
Travers Smith LLP
Contributor
Travers Smith LLP

Travers Smith LLP

It is not just law at Travers Smith. We treat our clients’ business as our business, their dispute...

View firm profile
Explore more from Travers Smith LLP

The UK government plans to fundamentally reshape how British companies are taxed on their overseas operations by making the foreign permanent establishment exemption mandatory from 2027, with oil and gas companies facing an accelerated implementation timeline. This policy shift eliminates the current flexibility that allows UK businesses to offset foreign branch losses against domestic profits, raising critical questions about international competitiveness and investment strategy.

United KingdomTax
Hannah Manning
Hannah Manning
Madeline Gowlett
Madeline Gowlett
Joseph Sheldrick
Joseph Sheldrick
Claudia French
Claudia French
Author LinkedIn connections

The UK government has announced it intends to make profits and losses attributable to a foreign permanent establishment (PE) of a UK resident company mandatorily exempt from UK tax.

Key Insights

  • From 1 January 2027, the exemption for foreign PEs will become mandatory for all UK companies. For oil and gas companies, the change will take place four months earlier, on 1 September 2026.
  • Pre-exemption PE losses will likely be 'hard-stopped', and anti-forestalling rules will target abusive attempts to accelerate their use. 
  • Justified as funding the 'Great British Summer Savings' package of measures to support families with the cost of living, the proposal is aimed at 'super' profits generated by oil and gas companies amid geopolitical tension in the Middle East.

We operate a free-to-view policy, asking only that you register in order to read all of our content. Please login or register to view the rest of this article.

Register for freeORLog in

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

View source

Related Articles

Legal Intelligence Newsletters: sign up for the latest legal and regulatory news on your chosen topics

Read more about

Related Comparative Guides

See more popular content from

Article

Frequently Asked Questions About IRS Clearance And Form 706-NA

UK executors and beneficiaries dealing with US assets face significant delays in obtaining IRS Transfer Certificates, with waiting times now extending to two or three years. This comprehensive FAQ addresses the critical questions surrounding Form 706-NA applications, US estate tax requirements, and the practical challenges of administering estates containing US shares and investments when the deceased was not a US citizen.
GlobalTax
Lester Aldridge LLP
Lester Aldridge LLP
Article

UK ‘Windfall’ Bank Tax Would Worsen An Already Complex System

UK banks face the prospect of a new windfall tax as campaigners push for additional levies on strong reported profits, while industry leaders warn of potential consequences for lending, investment, and the UK's position as a global financial centre. This analysis examines the practical implications of adding another layer to an already complex sector-specific tax regime that includes corporation tax, banking surcharge, and bank levy.
United KingdomTax
RPC
RPC
Article

Budget Tracker (2026)

The Chancellor of the Exchequer faces the formidable challenge of delivering his first Budget amid economic headwinds, geopolitical instability, and a wave of ambitious government promises. With GDP growth forecast at just 1.1%, inflation at 3.4%, and public sector net borrowing exceeding £115 billion, can he balance fiscal responsibility with pledges to avoid raising Income Tax, National Insurance, or VAT while funding increased defence spending and social care reforms?
United KingdomGovernment, Public Sector
Travers Smith LLP
Travers Smith LLP
Article

The EU Cyber Resilience Act's Vulnerability And Incident Reporting Requirements Are Now Live

The EU Cyber Resilience Act introduces mandatory vulnerability and incident reporting requirements for manufacturers of products with digital elements, effective September 2026. With tight 24-hour deadlines for initial reports and penalties reaching €15 million or 2.5% of global turnover, manufacturers must establish robust incident response procedures immediately.
United KingdomTechnology
Travers Smith LLP
Travers Smith LLP
Article

Nearly Out Of PERG-atory – But Not Quite Yet: Good News As The FCA Finalises PERG 18 On Cryptoassets, But With Even More Legal Changes To Come

Cryptoasset firms face a rapidly evolving regulatory landscape as the FCA's authorisation gateway opens on 30 September 2026. With the Financial Services and Markets Act 2000 (Cryptoassets) (Miscellaneous Amendments) Regulations 2026 laid before Parliament and the FCA's finalised PERG 18 guidance published within 24 hours, firms must navigate significant perimeter changes including new stablecoin payment exclusions.
United KingdomFinance and Banking
Travers Smith LLP
Travers Smith LLP
Article

SFDR 2.0 – European Parliament Negotiating Position: The Stage Is Set For Trilogue

The European Parliament has published its negotiating position on SFDR 2.0, setting the stage for trilogue negotiations between the Commission, Parliament and Council. With the asset management industry hoping for relief from the complexities of SFDR 1.0, the Parliament's proposals claim to simplify the regime while maintaining credibility of sustainability-related investments.
United KingdomFinance and Banking
Travers Smith LLP
Travers Smith LLP