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This guidance note explains how UK trading profits of overseas companies are subject to UK tax. For an overview of how overseas companies can be subject to UK tax, and how tax is collected, see the Non-UK companies subject to UK tax guidance note.

The taxation of UK trading profits of overseas companies depends to a large extent on how the activity is structured and also whether the business is trading ‘in’ the UK or ‘with’ the UK. Broadly, an overseas company might trade:

1. •

   in the UK via a UK subsidiary ― in such cases, the UK subsidiary will be subject to UK corporation tax on its worldwide profits in the usual way. Transfer pricing will need to be taken into account when considering the price at which any intra-group transactions between the UK subsidiary and the overseas parent take place. See the Setting up in the UK ― branch or subsidiary guidance note for more details on the tax considerations of using a UK subsidiary

2. •

   in the UK via a UK permanent