The OECD Action Plan on Base Erosion and Profit Shifting (BEPS), published in July 2013, identified 15 actions to address BEPS in a comprehensive manner and sets deadlines to implement these actions. On October 31^st, 2014, the OECD released a Public Discussion Draft on Action 7 indicating the need to address the prevention of the artificial avoidance of permanent establishments (PEs). Action 7 stresses the need to update the treaty definition of PEs, in particular the dependent agent provision, as per Art 5 para 5 and 6 OECD Model Tax Convention (MTC), as well as the specific activity exemptions. The reason for these updates is to deter multinationals from artificially fragmenting operations so as to qualify for the exception to PE status. A further concern is the splitting-up of contracts in order to circumvent the PE threshold for erection and construction PEs as per Art 5 para 3 OECD MTC and the service PE provision, as included in Art 5 para 3 No b of the UN MTC. The Public Discussion Draft further addresses tax treaty issues of insurance PEs and corresponding considerations concerning the profit attribution to PEs. Stefan Bendlinger gives an overview of the OECD’s proposals fo...