A locker is a permanent establishment in Germany

The trend in German fiscal court rulings to lower the threshold for the taxability of foreign companies in Germany is becoming more firmly established. In particular the establishment of a permanent establishment in Germany is now being accelerated after a number of rulings by the Bundesfinanzhof (Federal Fiscal Court) (BFH). This article analyses the court’s most recent ruling on permanent establishments (PE) – based on the double tax treaty with the UK.

The BFH decision is based on a judgment that at first glance is not very complex. However a closer analysis reveals that as is so often the case the decision raises further questions which will lead to considerable legal uncertainty for taxpayers and create a need for action on their part.

The court ruled that a locker at the disposal of the engineer on the basis of a contractual agreement with...