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This article evaluates the relevance of the permanent establishment concept amid evolving tax standards.

July 9, 2026European Taxation0 citations

Rethinking Permanent Establishments in an Era of Tax Transparency: A Comparative Approach

DCDavide Cotroneo AGAndrea Di Gialluca MRMicheleMaria Rossi

Key Points

This article evaluates the relevance of the permanent establishment concept amid evolving tax standards.
Comparative analysis of tax systems in Italy, the UK, and Germany regarding permanent establishment concepts.
Assessment of changes introduced by the OECD Model Commentary Update 2025.
Advocacy for an OECD protocol linking social security mobility certification to tax assessment.
Italy incorporates targeted exemptions while expanding the PE concept.
The UK aligns comprehensively with post-BEPS developments.
Germany modernizes its PE definition, but profit allocation needs further updates.

Abstract

In this article, the authors assess whether the permanent establishment concept remains appropriate in light of the 2025 Update to the Commentary on Article 5 of the OECD Model. A comparative study of Italy, the United Kingdom and Germany reveals that national systems are incorporating these developments unevenly: Italy balances the expansion of the PE concept with targeted exemptions; the United Kingdom is pursuing a comprehensive post-BEPS alignment; Germany is modernizing its PE definition, although its profit allocation framework has yet to keep pace. The authors advocate the adoption of a dedicated OECD soft law protocol linking social security mobility certification to a proportionate tax nexus assessment.

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Cotroneo et al. (Tue,) studied this question.

synapsesocial.com/papers/6a4f3be52b81a944af575a61 https://doi.org/https://doi.org/10.59403/291jd8c

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