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Germany: Draft circular on concept of permanent establishment (PE)

Guidance regarding home office PE’s in particular

June 23, 2026

The Ministry of Finance (BMF) on February 13, 2026, published a draft circular on the concept of a permanent establishment (PE), which was subject to public consultation until March 13, 2026.

With regard to home office permanent establishments in particular, the following aspects are noteworthy:

  • The “right of disposal” over the premises remains the key differentiating criterion; exceptions apply in particular to place-of-management and dependent agent permanent establishments.
  • The draft explicitly refers to the updated OECD commentary on home office arrangements.

Read a May 2026 report prepared by the KPMG member firm in Germany

Other KPMG “German Transfer Pricing Insights” concern:

  • Applicability of section 153(4) of the German fiscal code following mutual agreement procedures (MAP)
  • Economic maturity of intercompany loans in the focus of audits
  • Structural cash pool deposits under scrutiny in tax audits

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