International - Permanent Establishment risks

A permanent establishment (PE) is created when an undertaking has an ongoing and stable presence in a country that is not its home base, and as a result becomes subject to taxes imposed by that foreign country. To state it differently, a PE exists when a corporation is perceived to have a sufficient physical connection to the foreign country. The foreign country’s tax authorities will then tax the corporation on income generated locally.

Unfortunately, too many fast-growing companies are unaware of their creation of a PE, and only realise they were subject to foreign corporate income tax when the tax authorities audit them. Penalties and interest charges may be very high but unavoidable.

Let’s review now how and where your company does business, and reveal any risks that may exist.

To read more, specifically for France: https://www.impots.gouv.fr/etablissement-stable-en-france#English%20version