1. Introduction

In a very interesting decision, the Tax Court of Munich was required to determine as to whether a service provider could be regarded as having a permanent establishment at his client’s office premises, and whether a residential apartment occupied in the source state for less than six months could give rise to a permanent establishment in the source state. As those issues are relevant in a very large number of cases, it warrants our attention and analysis.

This article discusses in detail the relevant facts and the court’s approach. Thereafter, it critically examines as to whether various prerequisites (duration test, disposal test, functionality test, etc.) for existence of a permanent establishment were satisfied.