Corporation Tax Act 2009 section 18B

Chargeable gains etc.

Section 18B explains how the foreign permanent establishment exemption under section 18A applies to chargeable gains and losses on assets, including adjustments needed when assets are disposed of or realised.

• When a company disposes of an asset, exemption adjustments must remove the effect of any gains or losses previously included in the foreign permanent establishment amount — this can mean increasing a gain to reflect a prior loss, or increasing a loss to reflect a prior gain
• Gains or losses on immovable property (such as land and buildings) used by the foreign permanent establishment are included in the exemption calculation, to the extent the property was used for the establishment's business purposes
• Gains or losses attributed to a foreign permanent establishment in accounting periods before the section 18A election took effect are excluded from the exemption — they cannot be swept into the exempt amount retrospectively
• Where foreign tax was paid on gains arising before the election took effect, credit relief for that foreign tax continues to be available in the normal way, as if the exemption had not been introduced