Investment through a domestic permanent establishment/permanent representative

If a permanent establishment situated in Germany is used for
investments by a foreign investor, the proft derived from such
permanent establishment is deemed to be income from trade
or business and is thus subject to non-resident tax liability. The
same applies to income derived from a permanent representa-
tive in Germany.

A permanent establishment is defined as a fxed place of busi-
ness or facility that serves the business of an enterprise and
over which the entrepreneur (here: the foreign investor) exercis-
es control. This definition does not require human intervention,
so that, for example, the presence of an Internet server or an
oil pipeline on German territory may constitute a permanent
establishment.

A permanent representative is defined as an individual that
transacts business for an enterprise on an ongoing basis and, in
so doing, is subject to its substantive instructions. The existence
of a permanent establishment or a permanent representative in
Germany exposes the investor to German tax liability.