Some notes on the taxation of Permanent Establishments

Abstract

The concept of permanent establishment as a physical place in which an economic activity is carried out continuously in the source country has different interpretations depending on the internal or international legal regulation that is given. The permanent establishment, even when it is a taxpayer of the Non-Resident Income Tax, is taxed on the universal income obtained.

This fact gives it a mixed nature since it applies the Non-Resident Income Tax regulations in terms of the tax rate but also applies the residence criterion in terms of universal income taxation.

Permanent establishments are autonomous and are taxed independently of the non-resident entity. However, sometimes they must accumulate their invoices to determine if they have access to tax benefits such as those regulated in the special regime for small companies.

Currently, work is being done on the concept of a digital permanent establishment to tax the profits of large multinationals that operate online in territories where they have not a physical presence.