Step 2 - The Permanent Establishment (PE)

To understand the concept of a permanent establishment, we reference the definitions within the OECD Model Tax Convention, as this is the most commonly used model for bilateral tax agreements. However, in practice, the specific content of tax treaties is determined by the involved countries and may deviate from the OECD Model.

The OECD Model Tax Convention (OECD-MT) defines three primary types of Permanent Establishments (PE) in its Article 5:

• A fixed place of business - Article 5(1) & (2)

• A building site, construction, or installation project - Article 5(3)

• A dependent agent - Article 5(5).