Rules about deductionsU.K.
29Allowable deductionsU.K.
(1)A deduction is allowed for any allowable expenses incurred for the purposes of the permanent establishment.
(2)Expenses incurred for the purposes of the permanent establishment include executive and general administrative expenses so incurred, whether in the United Kingdom or elsewhere.
(3)It does not matter whether the expenses are incurred by, or reimbursed by, the permanent establishment.
(4)The amount of expenses to be taken into account under subsection (1) is the actual cost to the non-UK resident company.
(5)“Allowable expenses” means expenses of a kind in respect of which a deduction would be allowed for corporation tax purposes if incurred by a UK resident company.
30Restriction on deductions: costsU.K.
No deduction is allowed for costs in excess of those which would have been incurred on the assumptions in section 21(2).
31Restriction on deductions: payments in respect of intangible assetsU.K.
(1)No deduction is allowed for royalties paid, or other similar payments made, by the permanent establishment to any other part of the non-UK resident company in respect of the use of intangible assets held by the company.
(2)This does not prevent a deduction for any contribution by the permanent establishment to the costs of creation of an intangible asset.
(3)In this section “intangible asset” has the meaning it has for accounting purposes, and includes any intellectual property (as defined in section 712(3)).
32Restriction on deductions: interest or other financing costsU.K.
(1)No deduction is allowed for payments of interest or other financing costs by the permanent establishment to any other part of the non-UK resident company.
(2)But the restriction in subsection (1) does not apply to interest or other financing costs that are payable in respect of borrowing by the permanent establishment in the ordinary course of a financial business carried on by it.
(3)In subsection (2) “financial business” means any of the following—
(a)banking, deposit-taking, money-lending or debt-factoring, or a business similar to any of those, and
(b)dealing in commodity or financial futures.