Recent problems of definition and taxation of German permanent establishments

The definition of permanent establishment (PE) varies from country to country, but the main problem in the tax area is the same: economically, a PE is simply part of a cross-border company, but for tax purposes, it is to be treated as a separate entity, at least according to the OECD's new approach, which is often referred to as the "separate enterprise theory". This article examines the German definition of PE as well as the difficulties arising from this definition in national and international contexts. The OECD's new approach and its implications for the taxation of a PE in Germany or the PE of a German company abroad are also analysed.