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.