Home office is at the disposal of the foreign company through which it conducts its business.Home office is a fixed place of business (a certain degree of permanence).However, on a general level in a home-office situation a PE would be triggered in cases where all the following criteria are met: When assessing whether a PE is triggered, all relevant facts and circumstances must be taken into account for each situation. The focus of this guidance was on the fact that restrictions imposed by governments due to COVID-19 were exceptional and temporary in nature. So, if directors and executives are working from their home office in another country and for example move all or some board meetings online, this can give rise to questions about whether the company has residence, and thereby a corporate tax liability, in more than one country.ĭuring the COVID-19-related restrictions on movement, the OECD recommended 3 that employees who are working from a jurisdiction other than the one where their employer is located due to pandemic-related restrictions should not trigger PE. To determine tax residence for a company, some countries assess the place of effective management. Employees can trigger a PE through ongoing service delivery in another country.Īnother aspect which commonly arises in this context is dual residence which is not the same as PE. Employees can also trigger a PE through the so-called “agency permanent establishment” (or “agency “PE”), which describes a situation in which employees habitually perform decision-making activities in another country (e.g., negotiating and concluding sales contracts). Generally, employees working from a home office can trigger a PE. A PE must be duly registered with the local tax administration and separate accounting and tax filing must be arranged. The practical meaning of a PE is that it creates a taxable presence for a company outside the company’s country of establishment. If it is determined that a PE exists, the company becomes liable for corporate taxation in that country and subject to tax filing requirements. Permanent establishment (PE) is a term that describes an ongoing presence of a business in a country.
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