Germany: Updated guidance on permanent establishments (PEs)
Applies in all open cases
july 9, 2026
The German Ministry of Finance on June 18, 2026, released updated guidance providing clarifications on the criteria for establishing a permanent establishment (PE) for German domestic tax and treaty purposes.
The updated guidance includes clarifications on:
- Criteria for establishing a fixed place of business PE (e.g., degree of permanency, sufficient link to the ground, use for the enterprise’s business, and power of disposal over the place of business), which should not be assessed in isolation but as part of an overall assessment of the facts and circumstances
- Differences and relationship between domestic tax law and tax treaty rules with respect to the definition of a PE
- Further PE concepts, including the definition of a construction or assembly PE, preparatory and auxiliary activities and anti-fragmentation rules, and agency PE
- Treatment of an employee’s home office, which will generally not constitute a domestic PE of the employer, as the employer typically lacks sufficient power of disposal over the employee’s private premises
- A range of specific scenarios, including activities in third-party premises, service and management companies, market stalls, influencers, ships, and the leasing of business facilities or equipment
The updated guidance applies in all open cases.
Read a July 2026 report prepared by KPMG’s EU Tax Centre