What triggers permanent establishment risk for remote workers?
Permanent establishment risk occurs when remote work creates a taxable business presence in another jurisdiction, triggering corporate tax and payroll obligations. Tax authorities now scrutinize four primary triggers:
Key PE risk triggers:
- 50% working-time benchmark: When an employee works more than half their time from another country over a 12-month period (per OECD’s 2025 Model Tax Convention update)
- Revenue-generating activities: Regular business activities like contract negotiations or client relationship management conducted from a foreign location
- Executive decision-making authority: Senior leaders making binding business decisions from remote locations that commercially benefit the company
- Fixed place of business: Consistent use of a home office that serves business purposes beyond employee convenience
To dig deeper, visit the original article on the Thomson Reuters blog.