The “Google” Tax
The proposed 25% “Google”, or to use the official term “diverted profits tax” (“DPT”) is set to apply from 1 April 2015.
The DPT draft legislation is long and complicated; very broadly though it will only apply to associated companies or groups that have combined total annual UK sales of at least £10 million. In addition it will not apply to small or medium-sized enterprises (under the EC definitions).
Otherwise, there are three instances where the tax will apply:-
- Where a foreign company operating in the UK other than via a genuine third party, supplies goods or services to UK customers without creating a UK permanent establishment;
- Where a UK company creates a tax mismatch by using entities or transactions that lack economic substance;
- On an extension of the second in that it essentially applies the same provisions to a foreign company that trades in the UK through a UK permanent establishment.
As always the devil is in the detail and for companies that fall outside the exemptions a careful review of UK and overseas operations will be required.
Date: 19th January, 2015
Articles from this Author
20th July, 2017
Uncertain times for winding up transactions
3rd July, 2017
9th June, 2017
27th April, 2017
Government places Making Tax Digital legislation on hold
Contact Business Service Partners
Choose from the drop down menu below to select a Partner to contact.
For the latest Mercer & Hole news, visit our LinkedIn page mercer-&-hole