Right on time before the start of the summer season, the
Austrian Ministry of Finance dealt with the question whether
services performed on a sailing boat located in Croatia may
constitute a permanent establishment in the meaning of the
applicable double tax treaty.
Pursuant to art. 7(1) of the double tax treaty concluded between
Austria and Croatia ("DTT
Croatia"), the profits of an enterprise of a
contracting state shall be taxable only in that state unless the
enterprise carries on business in the other contracting state
through a permanent establishment situated therein. If the
enterprise carries on business through a permanent establishment in
the other state, profits of the enterprise may be taxed in the
other state to the extent attributable to that permanent
establishment. Similarly, the DTT Croatia in its art. 14(1) –
dealing with income derived from professional services or other
activities of an independent character – requires a fixed
base regularly
