The Concept of the (Neither) Permanent (nor an) Establishment and the (Destination Favourable) Attribution of Profits

Abstract

The concept of the permanent establishment is fast approaching its hundredth year. When it was firstly shaped, it was destined to serve specific policies by tackling certain inconveniences. In order to achieve that, the economic climate (the business status quo) had to be taken into account, so as for the given regulation to be adjusted. All the above happened and the result was brilliant. Though, things have not remained the same throughout this century; after all, should this have happened, it would have been alarming. It is oxymoron - but also true - that nowadays, a permanent establishment does neither need to be permanent, nor even an establishment. Arguably, a sceptical approach, indicatively focused on the condition of the permanence and the fixedness for establishing a PE, through its history, may demonstrate that the time passage has led to a dysfunction. A new nexus is imperatively needed. This article ends with a thought-provoking question, regarding the need of a new method for the calculation of tax liability when a permanent establishment is ascertained; given that the policy - which dictates the measures deployed - cannot be but closely related to the problems it aspirates to solve. Having said that, not only have the problems changed, but they have also proliferated; so maybe the policy (and as a consequence the fundaments of the measures deployed) must also be differentiated.