Permanent Establishment Risks Arising From Globally Mobile Employees

Many businesses with cross border operations (but lacking a branch network or overseas subsidiaries in those jurisdictions) rely on their globally mobile employees to maintain relationships with their overseas customer bases. These practices may have developed over a number of years in line with the growth of the business and frequently without any consideration being given to the potential tax consequences of such assignments.

Where such employees are regularly conducting business in other jurisdictions, and particularly where contracts are being concluded with customers in those jurisdictions, there is a risk of the business creating a permanent establishment and thus becoming liable to local taxes.