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14 November 2024

PE Watch | Latest developments and trends, November 2024

Denmark: Installation work in Denmark creates immediate PE

On 14 October 2024, the Danish Tax Board published binding tax ruling SKM2024.513.SR, addressing whether installation work conducted by a foreign entity in Denmark constitutes a Permanent Establishment (PE). The foreign entity was resident in a jurisdiction that has no tax treaty with Denmark. In the case, the foreign entity, with no office or warehouse in Denmark, sporadically sent employees to Denmark for equipment installations at multiple shops in Denmark with no fixed working address, with each stay lasting no more than five days at a time.

Despite the short and sporadic nature of these visits, the Danish Tax Board ruled that the activities created a PE under Danish Tax Law, which considers installation work as a PE from the first day of activity (in the absence of a tax treaty). As Denmark has no tax treaty with the entity's home country, the usual 12-month threshold for installation projects did not apply.

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Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

Document ID: 2024-2088

 
 

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