The concept of Permanent Establishment (PE) is fundamental to international tax planning. The OECD Model Treaty provides a valuable framework for understanding when a PE may arise, but there is no uniform interpretation of the PE definition. Interpretation is dependent on fact patterns, and will vary from country to country. The definition will also vary between treaties based on the OECD or UN Model Conventions. Reviewing the relevant tax treaty and understanding local interpretation is essential, as is monitoring change, if the PE tax risk is to be actively managed.
