Coffee & Consulting: Cross-border commuter - The risk of permanent establishment

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Permanent Establishment (PE) nationally / internationally • Fixed base on national territory • Exercise of a business or any other economic activity (acc. to Sect. 29 AT Federal Fiscal Code) • Definition overlaps to a large extent with the international definition below • E.g. Branches, CEO activity, home-office or construction for the duration of more than 6 months • PE definition acc to Art. 5 OECD-MA: • Fixed Establishment • Existence of an Austrian-based business facility • Duration • Exercise of a business activity • Power of disposal over business facility • Agency PE C r o s s - b o r d e r c o m m u t e r - T h e r i s k o f p e r m a n e n t e s t a b l i s h m e n t , S e p t e m b e r 5 , 2 022 COPYRIGHT © CONVINUS 2
Permanent Establishment (PE) nationally / internationally • Differentiation secondment and personnel lease: Secondment: • Service contract or an order • Risk of establishing a PE • In whose interest? • E.g. secondment of a marketing strategist from the parent company to the subsidiary to implement the marketing strategy at the subsidiary. If this is in the interest of the parent company then the parent company remains the employer for treaty purposes Personnel lease • The employee is leased to another company • Integration in / bound by instructions of the hosting company • Basically no risk of the establishment of a PE • Withholding tax (in case of inbound personnel leasing) • Relief at source only in case of • Intra-group transfer of employees or • Existence of an exemption notice (to be applied for at tax authority Bruck/Eisenstadt) • In both cases prerequisite: wage tax deductions to ensure the taxation of employees assigned to Austria C r o s s - b o r d e r c o m m u t e r - T h e r i s k o f p e r m a n e n t e s t a b l i s h m e n t , S e p t e m b e r 5 , 2 022 COPYRIGHT © CONVINUS 3
Page 1: COPYRIGHT © CONVINUS C r o s s - b
Page 5 and 6: Home-Office PEs - Qualification con
Page 7 and 8: PE avoidance • Preparatory and au
Page 9 and 10: Sample - Cross border employee SITU
Page 11 and 12: Your Questions? Michael Obernberger
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Coffee & Consulting: Cross-border commuter - The risk of permanent establishment

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