What Is a Permanent Establishment?

A relatively long-established institution established under the Constitution or Organic Law with a fixed name, address, staffing, and rules of procedure. A permanent institution is the main part of a state institution, and it is the basic guarantee for the completion of various management functions of the state. Its establishment must be in accordance with the provisions of the Constitution and the Organic Law, and subject to certain legal procedures for approval. The permanent establishment is not permanent, and it should be adjusted accordingly as the socio-political and economic situation develops and changes in all aspects.

Permanent establishment

Right!

A relatively long-established institution established under the Constitution or Organic Law with a fixed name, address, staffing, and rules of procedure. A permanent institution is the main part of a state institution, and it is the basic guarantee for the completion of various management functions of the state. It occupies a very important position and role in the entire state institution. Its establishment must be in accordance with the provisions of the Constitution and the Organic Law, and subject to certain legal procedures for approval. The permanent establishment is not permanent, and it should be adjusted accordingly as the socio-political and economic situation develops and changes in all aspects.

A permanent establishment is a concept used to determine whether an enterprise has a substantial connection with a state, so that the country can tax income derived from that permanent establishment. according to

A standing organization is the office of a power organization such as a congress. The standing organization of the National People's Congress is the Standing Committee, the standing organization of the Trade Union Congress is the trade union committee, and so on. Because various types of congresses cannot be held all year round, a permanent body is needed to handle inter-sessional affairs and to represent external powers. This is also the case for the Disabled Persons 'Federation. According to the Constitution of the Disabled Persons' Federation, the highest authority is the Congress and its Bureau, but neither the Congress nor the Bureau can meet together all year round.

Due to the various sources of operating profit,

Whether a dispatched person constitutes an institution's place or a permanent establishment must first be qualitatively determined through basic factors. In short, it is to determine who the dispatched person works for. "

Origin of permanent establishment

The permanent establishment first appeared in Germany, in the written tax law in 1885, and in 1899 was the first international tax treaty stipulated in the Austro-Hungarian Empire and Prussia. The German Double Taxation Act of 1909 further developed this.

Defects: There is no concept of a proxy permanent establishment, and there is no provision for a permanent establishment of a construction project.

Permanent establishment development

(1) Draft tax treaty of the League of Nations in 1927

Xiong Zi and Seligman's doctrine: economic ownership is more important than political ownership; avoiding double taxation.

Difficulty in presenting and applying alien exemption rules and abandoning them as reported by experts in 1925.

Draft tax treaty of 1927 distinguishes the types of agents, but affiliates are included in the permanent establishment

In 1928, affiliated companies were deleted, and mines and oil fields were added.

(2) Mexico and London Agreement

Mexico Agreement: Emphasizes taxation in the country of origin and tax in the country of residence only on isolated or incidental transactions;

London agreement: re-emphasisises the importance of the principles of the permanent establishment

Emphasis on the productive requirements of a permanent establishment

(3) OECD template and UN template

Differences between the two models regarding the understanding of permanent establishments. P60