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Ask an expert: Will a virtual server give rise to a taxable presence in the UK?

A server physically located in the UK cannot give a person a permanent establishment in the UK. Christopher Eames (Mishcon de Reya) considers a real life scenario which tests the limits of that principle.

Question

My client runs a successful crypto-trading business and would like to cease UK tax residence in order to avoid UK income tax on the profits of the trade. He uses a virtual server in London to ensure he is physically proximate to the crypto exchange. Could this virtual server give him a taxable presence in the UK?


Answer

The UK takes a relatively categoric stance that a server physically located in the UK cannot give a person a permanent establishment in the UK. However the limits of this principle have not been tested and as ever the devil is in the detail.

Background to co-location services

Crypto assets are extremely volatile. The price of a particular asset...

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