If your business is expanding internationally, you are likely familiar with the phrase permanent establishment (PE). Any business activity that generates revenue in a country can be deemed by local authorities as having created a PE, giving that country the power to assess income or a value-added tax.
The problem with PE is that it often exists in a gray area, open to interpretation by fiscal authorities in different countries. What’s considered to be revenue-generating in one place may be seen as purely marketing (non-revenue generating) elsewhere.
Permanent Establishment Risk or Not
Remember, in most countries, in order to recognize a PE, it needs to be formally registered under some corporate identity, typically a branch, representative office or a subsidiary entity.
Learn more about permanent establishment risk with this 60 minute archived webinar.
For more information about permanent establishment risk, and entity types, visit High Street Partner’s website.
