What is the Permanent Establishment (PE)?

Permanent establishment (PE) can be regarded as a tax concept that is often included in trade agreements and varies from country to country. Generally, it means that a tax authority considers a business as having an ongoing presence in the country. Therefore, the business is subject to corporate taxes and, possibly, VAT.

A company deemed to have a permanent establishment will be subject to every tax it would pay for profits generated in the country. In such case, the taxes are calculated according to the local tax rates.