Dependent Agents as Permanent Establishments

Preface

Taxing rights on business profits may be allocated to the source state only if an enterprise carries on business in that state through a permanent establishment situated therein. Therefore, the concept of permanent establishment plays a key role.

According to the OECD Model Tax Convention, a permanent establishment covers a fixed place of business through which the business of an enterprise is wholly or partly carried out, as well as a dependent agent who acts on behalf of a foreign enterprise and concludes contracts in the name of that foreign enterprise (e.g. commissionaires, sales service agents). Recently, tax authorities and courts in many countries have placed significant focus on cases where an agent renders its services to a foreign enterprise, in determining whether those agents should be regarded as permanent establishments.

To address this issue, the Institute for Austrian and International Tax law held a conference on 14 June 2013, where the concept of agency permanent establishment was discussed in depth. Renowned professors form the Vienna University of Economics and Business (WU), foreign universities, tax researchers from the WU and tax experts from various cou...