Article 5 of the OECD MTC settles the definition of the treaty concept of permanent establishments. Although in the past Article 5 has remained untouched, the commentary on the OECD MTC has several times been adjusted on the changing forms of international business, constantly lowering the bar for what constitutes a permanent establishment. Furthermore recent rulings of Germany's Federal Finance Court illustrate, that the court also seems to sympathize with an increasingly broader understanding.
Since the practical application of Article 5 raises a number of questions, the OECD has released a public discussion draft listing proposals for changes to the 2014 update of the commentary on Article 5. The authors give an overview of the proposed changes as well as on recent rulings of the German Federal Finance Court addressing the requirements needed to constitute a permanent establishment.
Intertax