Many people are unaware that the concept of permanent establishment from a VAT perspective follows an atypical logic which should not be confused with the concept in direct corporate tax. If misinterpreted, this notion can have very serious consequences.
If your company has a minimum infrastructure (warehouse, office, etc.) or staff (e.g. sales staff) abroad, it can quickly be confronted with the tricky issue of a possible “permanent establishment” in the country in question. Some tax authorities (Spain, France, Poland, etc.) no longer hesitate to reinterpret this notion as they see fit…
For example, does the simple fact of letting a building abroad constitute a permanent establishment for VAT purposes?
Source vatdesk.eu
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