On February 16, 2006 the Austrian Supreme Administrative Court ruled on a case concerning a domestic permanent establishment (pe) of a Dutch corporation. In 1999, the pe generated losses. Therefore, the corporation wanted to carry forward these losses and offset them against the pe's profits gained in 2000. According to sec. 102 para. 2 subpara. 2 of the Austrian Income Tax Act, the carry forward of losses of a pe is limited to the amount of those losses exceeding the worldwide income of the foreign person maintaining the pe. In the case at hand, the Austrian tax administration disallowed the carry forward of losses, because the losses did not exceed the worldwide income of the Dutch corporation. However, the Austrian Supreme Administrative Court decided that this is in contradiction with the permanent establishment non-discrimination provision in Art. 25 para. 3 of the Austrian-Netherlands Tax Treaty. Hermann Schneeweiss examines the grounds of the decision.