Permanent Establishments Series #2: Data Centers And Servers – New York Office Snippet

Loyens & Loeff NY regularly publishes ‘Snippets’ on EU tax and legal topics. This is the second Snippet in a series on permanent establishment (PE) risks for U.S. multinationals (US MNEs) in Europe. This Snippet focuses on PE risks in relation to data centers and servers.

For US MNEs relying on data centers in Europe, a key question is whether the presence of servers in Europe can give rise to a PE for the foreign enterprise that owns or operates them. As US MNEs active in AI and cloud solutions expand their European server footprints, it becomes increasingly relevant to determine whether those servers constitute a “fixed place of business” and therefore a PE. Under OECD guidance, followed by most European countries like the Netherlands, Luxembourg, Belgium and Switzerland, a PE requires: