Relatively recently, the Danish Tax Board issued a binding ruling to the effect that sub-contracting of certain services in Denmark by an Austrian company to a foreign company would give rise to the former’s permanent establishment (PE) under Art. 5(1) of the Austria-Denmark tax treaty. That ruling is likely to have far-reaching and controversial implications for a rather large number of outsourcing/ sub-contracting transactions even beyond Denmark, because the tax authorities in other jurisdictions may take similar approach in case of cross-border outsourcing/ sub-contracting transactions.

But with due respect, based on the available information, the Danish Tax Board’s approach and conclusion seem questionable.