Does hiring one salesperson abroad create a permanent establishment?
Not automatically. The article describes fixed places of business, dependent agents, construction sites and service presences, so the first question is which of those, if any, the arrangement fits. For a person acting on the enterprise, the enquiry is about authority and about how contracts actually come about, not about job titles: whether the person habitually plays the principal role leading to the conclusion of contracts, or merely forwards enquiries for decision elsewhere. Correspondence, pricing discretion and who signs are what decide it. Where the activity is genuinely preparatory or auxiliary, a carve-out may apply instead.
Is my employee working from a house abroad a permanent establishment?
The test is whether there is a fixed place of business at the disposal of the enterprise, and then whether what happens there goes beyond preparatory or auxiliary activity. Both halves matter. A space the enterprise effectively requires and uses for its core activity looks very different from one an employee happens to use for their own convenience. Because this turns on facts rather than labels, the useful evidence is mundane: what the employment arrangement requires, whether the address is held out to customers, whether costs are borne by the enterprise, and what work is actually carried on there.
Do I owe tax in a country where I have no office at all?
Possibly. An office is only one of the routes the article describes. A dependent agent, a construction site or a service presence can each cross the threshold without any premises being taken. The reassurance, such as it is, sits in the rule itself: a foreign business is taxable on its profits only to the extent they are attributable to a permanent establishment. So there are two separate questions, and they are answered in order. First whether the threshold is crossed. Then, only if it is, how much profit belongs to what was crossed.
How long can a construction project run before it is taxable there?
The article sets a duration for construction sites, but the length is not uniform across the treaty network, so it is read out of the particular treaty rather than assumed from another one. The counting question matters as much as the threshold: how interruptions, mobilisation and subcontracted phases are treated is a matter of the treaty text and its accepted interpretation, and it is worth settling before the project starts rather than after the site has closed. Where a project is anywhere near the threshold, contemporaneous site records are the difference between a position and an argument.
What does preparatory or auxiliary activity actually mean?
It is the carve-out in the article for activity that supports the enterprise without being part of how it earns its profits. The distinction is functional rather than a matter of size: the question is whether what is done at the place sits at a distance from the profit-earning activity or forms part of it. The same physical arrangement can fall on either side depending on what is actually carried on there, and the answer can change as a business grows into a market. A carve-out relied on for several years is worth re-testing rather than assumed to hold.
How much of my profit does a foreign branch have to report?
Not a share of group profit and not local turnover. Once the threshold is crossed, attribution treats the establishment as if it dealt at arm’s length with the rest of the enterprise, so the work is to identify what functions it actually performs, what risks it carries and what assets it uses, and then to price the dealings with the rest of the business accordingly. That analysis is the substance of the filing. Done properly it also tends to hold up under scrutiny, because it explains a figure rather than asserting one.
When does a construction project create a permanent establishment?
Most treaties give building sites and installation projects their own rule, turning on how long the work continues rather than on whether an office exists. Time is generally counted per site, and related contracts split between group companies are commonly aggregated to stop the threshold being avoided by paperwork. The period differs between treaties, so it is read from the one that applies. See permanent establishment risk.
Does hiring one remote employee in another country create a tax presence?
It can, on two separate fronts, and the second applies even when the first does not. A permanent establishment may arise if the employee has a fixed place of business there or concludes contracts for you. Independently of that, employing someone locally generally brings payroll registration, wage withholding and social security contributions in their country from the first payroll — obligations that do not wait for a permanent establishment finding. Contractor paperwork does not by itself avoid either. See remote work and tax exposure.
