Strategizing Multinational Tax Risks

An update of recent PE developments:

• BEPS Multilateral Instrument (MLI) updates for PE actions by several countries, as OECD MLI provisions for PE are not mandatory, thus these developments should be closely monitored
• Home office PE’s are clarified in several countries, especially important for companies with no other business presence in that country and their job is a significant function of the company
• US IRS Rev. Proc. 2020-30 re: COVID-19 guidance for possible PE situations
• Denmark ruling, noting a significant home office employee performing a significant job function for the company was not preparatory or auxiliary
• Malaysia’s clarification of “place of business”

PE will be a significant concern as the uncertainty of COVID-19 continues, with various cross-border travel restrictions.  Companies may want to consider planning alternatives and avoid this trap that some countries may want to exploit in their search for revenues.

EY’s summary highlights the above provisions in greater detail.

https://www.ey.com/en_gl/tax-alerts/pe-watch–latest-developments-and-trends–june-2020