Postby Michael I. Atlas, CA » Thu Jul 14, 2011 4:27 pm
Sorry, Maths, but I do not understand that comment -normally "management fees" would be considered to be governed by the Business Profits article of a tax treaty where that source of income is not specificaly mentioned.
So, if the tax treaty does not mention management fees, no tax should be levied if there is no PE in the paying country; if tax is withheld, it should be recoverable by filing, so I would not think that UK tax authorities would allow a credit? No?
What is not totally clear in the question is what is meant by "agency"-I am assuming that it means a local (i.e. Mexican) subsidiary) and it would pay fees to the UK parent.
If so, the comments above should apply. The UK parent presumably would not have a PE in Mexico, so no tax should be levied.
If "agency" actually means a branch, I do not think you can have a "management fee" as such, since a person cannot pay fees to itself. However, it can be a matter for determinig branch profits.