In February 2026, the Bundesministerium der Finanzen (BMF) published a draft circular providing comprehensive guidance on the concept of a permanent establishment (Betriebsst\u00e4tte)<\/b> under German tax law.<\/p>\n
While the concept itself is not new, evolving business models \u2014 including remote work, digital operations and cross-border structures \u2014 have significantly increased its practical relevance.<\/p>\n
At its core, the guidance addresses one key question: When does economic activity in Germany become a taxable presence?<\/b><\/b><\/p>\n
What does this mean in practice?<\/b><\/p>\n
The draft consolidates the tax authorities\u2019 interpretation of Section 12 of the German Fiscal Code (AO) and aligns it with the principles of the Organisation for Economic Co-operation and Development (OECD), particularly Article 5 of the OECD Model Tax Convention.<\/p>\n
Three scenarios are especially relevant for international businesses:<\/p>\n
1. Remote employees working from Germany<\/b>
\nIf an employee works permanently from Germany and performs core business functions, this may trigger a permanent establishment \u2014 even in the absence of a formally rented office.<\/p>\n
2. Dependent agents<\/b>
\nA person in Germany who regularly concludes contracts, or plays a decisive role in their conclusion, can create a taxable presence for a foreign company.<\/p>\n
3. Preparatory or auxiliary activities<\/b>
\nThe BMF emphasizes that exceptions must be interpreted narrowly. If the German activity forms a functional and essential part of the value chain, it is unlikely to qualify as merely preparatory or auxiliary.<\/p>\n
Why companies should act now<\/b><\/p>\n
For foreign companies, the draft sends a clear message: formal structures are becoming less decisive than economic substance<\/b>.<\/p>\n
The absence of a registered branch or office no longer automatically prevents a permanent establishment from arising. Tax authorities will focus on the actual functions performed in Germany.<\/p>\n
Businesses with employees, sales representatives or management functions located in Germany should therefore assess:<\/p>\n
Although the document is currently in draft form, such guidance typically shapes future tax audits and administrative practice.<\/p>\n
For internationally operating companies, this is an opportune moment to review their German footprint and proactively mitigate potential tax exposure in 2026 and beyond.<\/p>","protected":false},"excerpt":{"rendered":"
In February 2026, the Bundesministerium der Finanzen (BMF) published a draft circular providing comprehensive guidance on the concept of a permanent establishment (Betriebsst\u00e4tte) under German tax law. While the concept itself is not new, evolving business models \u2014 including remote work, digital operations and cross-border structures \u2014 have significantly increased its practical relevance. At its […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[1150,1139,1144,1142,207,1160,1156,1162,983,1157,1158,976,1163,1153,1159,755,1161,977,1149,1140,633,1138,1137,1145,1151,1141,1146,1155,1143,1147,1152,1154,1148],"class_list":["post-673","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag--12-ao","tag-betriebsstatte","tag-betriebsstatte-2026","tag-bmf-2026","tag-compliance","tag-cross-border-taxation","tag-doppelbesteuerung","tag-foreign-companies-germany","tag-german-tax-law","tag-grenzuberschreitendes-geschaft","tag-international-tax","tag-internationales-steuerrecht","tag-oecd-article-5","tag-oecd-statya-5","tag-permanent-establishment","tag-steuerrecht-deutschland","tag-tax-compliance-germany","tag-unternehmensbesteuerung","tag-zavisimyj-agent-germaniya","tag-inostrannyj-biznes","tag-komplaens","tag-mezhdunarodnoe-nalogovoe-pravo","tag-nalogi-v-germanii","tag-nalogi-v-germanii-dlya-inostrannoj-kompanii","tag-nalogovoe-prisutstvie-v-germanii","tag-nalogovoe-strukturirovanie","tag-nalogovye-riski-v-germanii","tag-nalogovyj-audit-struktury","tag-postoyannoe-predstavitelstvo-v-germanii","tag-razyasneniya-bmf-2026","tag-soglashenie-ob-izbezhanii-dvojnogo-nalogooblozheniya-germaniya","tag-transgranichnyj-biznes-germaniya","tag-udalyonnaya-rabota-i-nalogi-germaniya"],"acf":[],"_links":{"self":[{"href":"https:\/\/sugrobov.de\/en\/wp-json\/wp\/v2\/posts\/673","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sugrobov.de\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sugrobov.de\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sugrobov.de\/en\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/sugrobov.de\/en\/wp-json\/wp\/v2\/comments?post=673"}],"version-history":[{"count":1,"href":"https:\/\/sugrobov.de\/en\/wp-json\/wp\/v2\/posts\/673\/revisions"}],"predecessor-version":[{"id":674,"href":"https:\/\/sugrobov.de\/en\/wp-json\/wp\/v2\/posts\/673\/revisions\/674"}],"wp:attachment":[{"href":"https:\/\/sugrobov.de\/en\/wp-json\/wp\/v2\/media?parent=673"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sugrobov.de\/en\/wp-json\/wp\/v2\/categories?post=673"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sugrobov.de\/en\/wp-json\/wp\/v2\/tags?post=673"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}