UK Company - Permanent Establishment in Germany

UK Company operating in Germany

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My client is a managment consultant operating via a Limited Company where she is the sole director and shareholder. To date she has lived in the UK and worked from here for a client in Germany. There were some visits to the client.

She has now moved to Germnay an continues to work for the same client, both from home and on site.

I'm fairly sure this creates a permanent establishment in Germany and that it will need to file tax returns in both countries. I am struggling to find confirmation of this on the HMRC website.

She is German and I think intending to stay in Germany in the long term so I'm thinking she woudl be better off setting up a Germany Company and winding up the UK company or leaving it dormant.

Am I right about the permanent establishment and tax implications?

Are there any advantages of continuing to operate via the UK compnay vs setting up a German company?

Many thanks

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By Accountant A
02nd Oct 2016 11:53

KatAd wrote:
I'm fairly sure this creates a permanent establishment in Germany and that it will need to file tax returns in both countries. I am struggling to find confirmation of this on the HMRC website.

You need to look at the UK and German obligations independently and then look at the UK/Germany Double Tax Agreement. Without a proper understanding of the position in Germany (as it applies to your client), it's difficult to give an informed view - and that's before Brexit ....

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By Harrison88
03rd Oct 2016 09:48

This definitely creates a PE in Germany. Not only are there Corporate tax implications but you will have income tax implications for the residency status of the individual.

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