Services

Permanent Establishment-Risk-Check

Analyzing the PE-Exposure & Avoidance Strategies

You are engaged in cross-border business and do not want to trigger an Austrian or foreign permanent establishment (PE)? Are you aware of the trend towards assuming a PE even in cases where no typical fixed place of business exists?

Do you have an overview on the fast-changing and increasingly restrictive practices of tax administrations in different countries? Are you absolutely certain that your PE avoidance strategies work effectively? If you are not able to answer all of the above questions with a firm ‘yes’, you may find yourselves susceptible to PE-related risks. Limit your exposure and contact our experts for their standardised PE Risk Check.

You are engaged in cross-border business and do not want to trigger an Austrian or foreign permanent establishment (PE)? Are you aware of the trend towards assuming a PE even in cases where no typical fixed place of business exists?

As the triggering of a PE leads to tax revenues for the PE state, many states – including Austria – tend to assume the existence of a PE even in cases where no typical fixed place of business exists, for instance:

  • The employee’s home office 
  • Office space at the site of the service recipient
  • Foreign construction sites or installation projects 
  • Rendering of services to other group companies by employees who physically work on-site 
  • Borderline cases in the area of secondment agreements 
  • Working at the service recipient’s site for a longer period of time 
  • Agency PE even if no power of attorney under civil law exists
  • PE of the principal due to a commission agent in the other state
  • “Service-PE-Concept” included in some recently-concluded tax treaties 

Low PE-Threshold

As the triggering of a PE leads to tax revenues for the PE state, many states – including Austria – tend to assume the existence of a PE even in cases where no typical fixed place of business exists, for instance:

  • The employee’s home office
  • Office space at the site of the service recipient
  • Foreign building sites, constructions or installation projects
  • Rendering of services to other group companies by employees which physically work on-site
  • Borderline cases in the area of secondment agreements
  • The mere working at the service recipient’s site for a longer period of time 
  • Agency PE even if no power of attorney under civil law exists
  • PE of the principal due to a commission agent in the other state
  • „Service-PE-Concept“ included in some tax treaties concluded recently

Low PE-Threshold

  • Tax burden on PE-profits within the PE-state
  • Double taxation of PE-profits
  • Withholding obligations for employment taxes, social security obligations and other non-wage labour costs
  • Differing VAT obligations 
  • Withholding tax on payments made by your customers
  • Taxation of employees in the PE-state – regardless of the 183-day rule!
  • Liability for taxes and charges relating to prior years
  • Penalties under Austrian tax law

Your Risk

  • Step 1: Analyse the facts of the case using our standardised questionnaire either in a face-to-face meeting or a conference call
  • Step 2: Review the relevant documents and agreements according to our standardised request list
  • Step 3: Formulation of a written opinion on your tax situation: Evaluation of the exposure of triggering a PE; PE avoidance strategies, where required; taxation of employment income where a PE is triggered; high level discussion of the arm’s length compensation of the Austrian PE (transfer pricing issues)
  • Step 4: Follow-up-call on our tax opinion, where required
  • Fixed fees are possible

Austrian PE-Check –
A Standardized Procedure

  • A service for Austrian companies exposure to triggering a foreign PE
  • Similar standardised check also for a foreign PE
  • Coordination with our international Deloitte partner offices with Deloitte Vienna as a single point of contact
  • Fixed fees are possible

Foreign PE-Check

  • Support with avoiding triggering a PE (for instance drafting guidelines addressed to employees and service recipients, reviewing amendments to service agreements from a tax perspective)
  • Tax registration of the PE together with tax compliance
  • Supporting employees working in Austria with regard to their Austrian tax obligations by our Global Employer Services experts
  • Support with social security and work permit issues
  • Payroll accounting
  • Computation of a range of an arm’s length compensation for the Austrian PE by our transfer pricing experts
  • Coordination with our international Deloitte partner offices with Deloitte Vienna as your single point of contact

Related Services

  • Avoiding tax risks (and possibly criminal liability under Austrian taxation law)
  • Effective PE avoidance strategies
  • Tax benefit by avoiding the triggering of a PE in a high tax jurisdiction
  • Tailor-made solutions in the area of corporate tax, VAT, payroll tax, withholding tax and transfer pricing – while dealing with only a single point of contact
  • Time-effective service from the client’s perspective due to our efficient, standardised process

 

Your benefits

Contact

Andrea Kopecek, MSc

Andrea Kopecek, MSc

Partner Steuerberatung

Andrea Kopecek ist Partner in der Steuerberatung bei Deloitte in Wien. Als Steuerberater befasst sie sich mit Themen rund um Arbeitnehmerentsendungen. Dazu gehören vor allem die steuerliche und sozial... Mehr