Within the system of double taxation treaties the concept of permanent establishments constitutes the predominant link to tie revenue to a source State. It is not only of importance for allocation of business profits and the taxation rights accrued thereupon, but can also determine which Contracting State is allowed to levy taxes on employee remuneration in case of certain short-term assignments. In addition it decides about certain corporate tax consequences secondment activities may have. Understanding and interpretation of the concept are under current discussion on OECD level. This article sums up the debate's main aspects, presents its consequences and explains why Germany has a reserved position towards some of the henceforth proposed changes.
Intertax