Taxation (International and Other Provisions) Act 2010 section 259FC

Counteraction where the payer is within the charge to corporation tax for the payment period

Section 259FC defines what constitutes "excessive PE inclusion income" and "PE inclusion income" for the purposes of counteracting hybrid mismatch arrangements involving permanent establishments, where a company operates in both the UK and a parent jurisdiction.

• PE inclusion income arises from actual or deemed transfers of money or money's worth from a company in its parent jurisdiction to the same company in the UK, where those transfers do not generate a corresponding reduction in taxable profits or increase in losses in the parent jurisdiction
• Excessive PE inclusion income is either the full PE inclusion income (where there is no corresponding deduction at all in the parent jurisdiction) or the portion that exceeds the aggregate tax effect on profits in the parent jurisdiction
• Any reduction in taxable profits or increase in losses in the parent jurisdiction is ignored if tax is charged at a nil rate under the law of that jurisdiction
• A taxable period in the parent jurisdiction is relevant for these purposes if it begins within 12 months after the end of the UK accounting period in question, or if it is just and reasonable to look at a later period instead of an earlier one