1.                       Introduction

Recently, a Danish High Court delivered a decision to the effect that a Polish construction company had a fixed place permanent establishment in Denmark because of rented premises, in which it stored scaffoldings. The High Court also opined that because the Polish company had a permanent establishment under Art. 5(1) of the Denmark-Poland tax treaty, the construction permanent establishment provision contained in Art. 5(3) of the tax treaty was not relevant.

The High Court opined that the fact that the Polish company satisfied the ‘disposal test’ in respect of the above-mentioned rented premises was sufficient for existence of a permanent establishment under Art. 5(1) of the tax treaty.

For reasons discussed in detail in this article, with due respect, it seems difficult to reconcile with the High Court’s approach and conclusion.

Also, as pointed out in this article, the German federal tax court’s rationale in a decision ruling out existence of a fixed place permanent establishment under Art. 5(1) of the tax treaty between Germany and Switzerland reflects the correct position – that satisfaction of the disposal test, per se, is not adequate for existence of a permanent establishment.