Coffee & Consulting: Cross-border commuter - The risk of permanent establishment

Examples • A

Examples • A consulting company based in Italy offers its services also in Austria. In Austria, always the same office is rented in 14-day intervals. In between there is no disposal over the office in Austria. • SOLUTION: Fixed establishment Over a long period of time (also recurring with interruptions) Business activity Power of disposal • An AT company seconds an employee for the duration of 12 months to the Chinese group company so that he or she can train employees in the operation of a machine. The costs for the training are charged based on the personnel costs plus 10% mark-up. • SOLUTION: • In whose interest? • Parent for control and coordination PE risk • Personnel lease basically no PE risk • Service PE (in certain DTA) C r o s s - b o r d e r c o m m u t e r - T h e r i s k o f p e r m a n e n t e s t a b l i s h m e n t , S e p t e m b e r 5 , 2 022 COPYRIGHT © CONVINUS 4

Home-Office PEs – Qualification conflicts with GER and CH AT • Treats Home-Office as a PE for treaty purposes if the following conditions are met: • Factual power of disposal independent of access authorization • Not only temporary, more than (25% of the total activity) • Serving for the exercise of the business GER • Home-Office does usually not constitute a PE • No legal power of disposal over private apartments • GER employer is granting Home-Office to an Austria-based employee risk of double-taxation • AT employer is granting Home-Office to an German-based employee possibly double-non-taxation CH (to be discussed in more detail with the experts from Convinus) • Home-office PEs are known in Swiss tax law • 12-months duration • Ordering of Home-Office / costs for Home-Office are borne by employer • PE risk higher the more the employer has influence on the Home-Office • No highest court decisions up to now Avoidance qualification conflicts by interpreting method article or mutual agreement procedure C r o s s - b o r d e r c o m m u t e r - T h e r i s k o f p e r m a n e n t e s t a b l i s h m e n t , S e p t e m b e r 5 , 2 022 COPYRIGHT © CONVINUS 5