Tax and administrative treatment of short term business visitors from overseas branches

15 May 2018

This consultation is about the tax and administrative treatment of Short Term Business Visitors (STBV) from foreign permanent establishments (“overseas branches”) of UK companies (closes at 11:45pm on 6 August 2018).



The employees of companies with offices across multiple countries are sometimes required to travel abroad on business. This can result in double taxation of the employee’s earnings, with liabilities arising in the country they are visiting and in the country they are resident for tax purposes. In these circumstances, employment taxes can be withheld in two countries at the same time.

The UK has Double Taxation Agreements (DTA) with many countries to ensure an individual will not pay tax twice on the same income. The precise terms of the agreements vary, but they usually work by relieving the individual’s income from tax in the one country or by providing a foreign tax credit in the other. An individual whose earnings have been double charged to tax will usually need to make a claim for Double Taxation Relief (DTR). DTR is available to individuals who are resident in a country with which the UK has a DTA.

In the UK an administrative easement is available to UK companies with STBVs arriving from their overseas subsidiaries. The UK company can apply to relax their obligation to operate PAYE on the relevant earnings of an individual who is:

  • Tax resident in a country with which the UK holds a DTA
  • Coming to the UK to work for a UK company for less than 183 days in any twelve month period
  • Economically employed by a non-resident entity

There is no equivalent easement for UK companies with STBVs arriving from an overseas branch. This means that a UK company with an STBV from an overseas branch will incur costs and administrative burdens that a UK company with an STBV arriving from an overseas subsidiary may not.



The government is considering two broad policy options aimed at realising improvements for UK companies:

1.  Extending the PAYE special arrangement UK workday rule

The current arrangement has a strict limitation on the number of UK workdays allowed in the tax year. The government is considering extending the UK workday rule from 30 to 60 UK workdays. This is expected to mean more STBVs will qualify for the PAYE special arrangement and a greater number of UK companies and individuals can benefit from the arrangement’s administrative easements. The easements would mean the UK company can operate PAYE on an annual basis for STBVs covered by the arrangement and does not have to report in real time; and STBVs would not be required to file a SA return for their relevant earnings.

2.  A new tax exemption for STBVs from overseas branches

The government is also considering an option to introduce a new and specific tax exemption for STBVs from overseas branches. The intention is to align the effective tax treatment of STBVs from overseas branches to those eligible for STBVAs. A new tax exemption would prevent double taxation of the individual’s earnings; and remove the requirement on the UK company to operate PAYE.


CIPP comment

For those of you with a vested interest, the Policy team will be publishing a survey on these proposals to gather your views to help inform our response to this consultation.