Reference

Permanent Establishment

Permanent Establishment

Plain meaning

A treaty concept used to determine when a business has enough presence in another country for that country to tax its business profits.

Also called

PE

Key points

  • A PE can arise through a fixed place of business, dependent agent, construction project, or other treaty-specific rule.
  • If a non-resident has a PE in Canada, Canada may tax profits attributable to that PE.
  • The definition depends on the applicable tax treaty and domestic law context.
  • PE analysis is separate from GST/HST registration, payroll, immigration, and corporate-law presence questions.

Why it comes up

Permanent establishment questions affect cross-border businesses, remote work, services, construction projects, and treaty protection.

News signals

tax treaties cross-border business non-resident tax

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