Permanent Establishment (PE)

A Permanent Establishment (PE) is a fixed place of business through which a company's activities are wholly or partly carried out in a foreign country. This includes offices, factories, or branches, and more generally, any setup that allows the company to operate and generate income there. When a company has a PE in a foreign country, it may become liable to pay taxes on the profits attributable to that presence. The concept helps determine when a business's activities in a different country create a taxable presence, avoiding double taxation and ensuring proper taxation rights between countries.