Permanent establishment is a term used in national and international tax law . In national tax law, the existence of a permanent establishment has various legal consequences . In bilateral law of the so-called double taxation agreement , the existence of a permanent establishment basically allows the state of the permanent establishment to access the income generated by it for income tax purposes (cf. Articles 5 and 7 of the OECD Model Convention ). Also, the European law ties in various tax areas of regulation in the German language version of the concept of permanent establishment.
Section 12 (1) of the Tax Code (AO) defines a permanent establishment as any permanent business facility or facility that serves the activity of a company. The following are to be regarded as operating facilities in particular: the premises of the management , branches , offices , manufacturing or workshops , warehouses , purchasing or sales points , mines , quarries or other stationary, locally advancing or floating sites for the extraction of mineral resources , construction work or assembly, also locally Progressive or floating, if either the individual construction or assembly or if one of several construction works or assemblies existing next to each other or if several consecutive construction works or assemblies last longer than six months.
In the case of income from employment, d. H. Wages and salaries, income tax is levied as a deduction from wages ( wage tax ), insofar as the wages are paid by an employer who has a domicile, habitual residence, management, headquarters, permanent establishment or a permanent representative in Germany (domestic Employer, Section 38 (1 ) EStG ). Permanent establishment in the specific sense of wage tax law is the company or part of the employer's company in which the wages that are decisive for the implementation of the wage tax deduction are determined ( Section 41 (2) EStG).
The business tax is subject to any related business enterprise , as far as for him in Germany a permanent establishment is maintained ( § 2 GewStG ). If a company has more than one permanent establishment , the trade income must be broken down so that each municipality is entitled to part of the trade tax revenue . The standard for the dismantling is the ratio of the wages, cf. §§ 28 ff. GewStG.
Income tax / corporation tax
Persons who do not have a domicile or habitual abode in Germany are subject to limited income tax if they earn domestic income within the meaning of Section 49 of the Income Tax Act ( Section 1 (4) of the Income Tax Act). Corporations that have neither their management nor their domicile in Germany are subject to corporation tax on their domestic income ( Section 2 KStG ). Domestic income is income from commercial operations that is generated in a permanent establishment located in Germany ( Section 49 Paragraph 1 No. 2 Letter a EStG).
Individuals and corporations with unlimited tax liability are generally subject to German taxation on their global income. Income generated in permanent establishments abroad is included in the domestic tax base. The state of the permanent establishment will also have tax access to such foreign permanent establishment income. According to domestic law - in order to avoid or reduce double taxation of the same profits - such a comparable tax levied abroad can be offset against the domestic tax (maximum amount of the applicable domestic tax) ( § 34c EStG, so-called imputation method ). If there is a double taxation agreement between the countries involved (see bilateral agreement law below ), the profit from the foreign permanent establishment may be exempted, i.e. H. can be eliminated from the domestic tax base and is then only subject to taxation in the country in which it is located (so-called exemption method ). Otherwise the crediting method applies, comparable to national law. If the foreign permanent establishment that is not located in an EU member state or EEA state generates losses, these can only be offset against positive income from other permanent establishments in the same country; a surplus can be carried forward and is not taken into account for taxation (cf. § 2a para. 1 EStG), unless the permanent establishment concerned carries out at least 90% of so-called active activities, e.g. B. Manufacture and delivery of goods ( Section 2a (2) EStG). Losses from EU or EEA permanent establishments are generally to be taken into account as a profit-reducing measure within the scope of the domestic assessment basis, i.e. they can be offset against domestic profits.
Bilateral agreement law
If a company does business in several states, each state may tax the income for which there is a connection point in its territory . Since multiple taxation of corporate profits is to be avoided, various states have concluded double taxation agreements in which they “divide” the right to tax among themselves. Germany has signed the agreement on the elimination of double taxation in the case of profit adjustments between affiliated companies, which deals with the determination of prices for goods and services in multinational groups in the event of a dispute. If a company carries out its business in another country through a permanent establishment located there, the company's profits can be taxed in the other state to the extent that they can be assigned to this permanent establishment (Art. 7 OECD-MA 2008/2010).
Under the terms of the treaty, "permanent establishment" means a fixed business establishment through which the business activity of a company is carried out in whole or in part (Art. 5 Para. 1 OECD-MA). According to Art. 5 Para. 2 OECD-MA, permanent establishment includes in particular a place of management, a branch, an office, a manufacturing facility, a workshop and a mine, an oil or gas deposit, a quarry or another place of exploitation of mineral resources. Construction or assembly is only considered a permanent establishment if its duration exceeds twelve months (Art. 5 Para. 3 OECD-MA). According to Article 5, Paragraph 4 of the OECD-MA, the following are not considered permanent establishments: facilities that are used exclusively for the storage, exhibition or delivery of the company's goods or goods; Inventory of any goods or merchandise owned by the company that is maintained solely for storage, display or delivery; Stocks of goods or goods belonging to the company that are maintained solely for the purpose of being processed or processed by another company; a fixed place of business that is maintained solely for the purpose of purchasing goods or merchandise or obtaining information for the company; a fixed place of business that is maintained solely for the purpose of performing other activities for the company that are preparatory or ancillary; a fixed place of business that is maintained solely for the purpose of performing several of the aforementioned activities, provided that the resulting overall activity of the fixed place of business is of a preparatory nature or constitutes an ancillary activity.
Art. 5 Para. 5 OECD-MA describes digital permanent establishments .
The activity of a broker , commission agent or other independent representative does not usually lead to a permanent establishment of the client, provided that these act in the context of their ordinary business activity (Art. 5 Para. 6 OECD-MA). A subsidiary or other controlled company does not constitute a permanent establishment of the parent company or the controlling company (Art. 5 Para. 7 OECD-MA). The interpretation under the law of the treaty takes precedence over that under national law (cf. Art. 3 Para. 2 OECD-MA). Double taxation agreements take precedence over domestic law ( Section 2 (1) AO).
According to Art. 2 Para. 1 of the so-called Parent-Subsidiary Directive (MTRL) permanent establishment is a fixed place of business in a member state through which the activity of a company of another member state is carried out in whole or in part, provided the profits of this business establishment are in that member state in which it is located, are subject to tax under the double taxation agreement or - in the absence of such an agreement - under national law (Art. 2 Para. 1 MTRL).
- gesetze-im-internet.de Federal Ministry of Justice and Consumer Protection
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