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What Is Permanent Establishment?

The Irish Revenue* defines permanent establishment as “a fixed place of business through which the business of an enterprise is wholly or partly carried on” and includes it as an article in double taxation treaties which follow the Organisation for Economic Co-operation and Development (OECD) model tax treaty.

As the text of individual double taxation treaties can vary, the relevant article of the appropriate treaty should always be consulted when making a permanent establishment determination.

What Are The Consequences Of Permanent Establishment?

If an enterprise from outside of Ireland is deemed to have permanent establishment in the state, then Irish Revenue has the right to tax the profits of that enterprise.

The taxes which can apply, depending on the circumstances, are:

  • Income Tax;
  • Corporation Tax; and
  • Capital Gains Tax.

Do I Have Permanent Establishment?

Determining permanent establishment is not always straightforward, although article 5 of the OECD model lists the following as indicators of permanent establishment:

  • A place of management;
  • A branch;
  • An office;
  • A factory;
  • A workshop; and
  • A mine, an oil or gas well, a quarry or any other place of extraction of natural resources.

This list is not exhaustive, and even without a physical presence such as those listed above, it is still possible for a business to have permanent establishment, particularly when the business has an agent in Ireland acting on its behalf to conclude contracts.

How EisnerAmper Ireland Can Help

To make a definitive determination we would recommend consulting EAI’s specialist Corporate Tax team for expert advice.

Contact our Tax Team

*Article 5 of Revenue’s Commentary on Irish tax treaties

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