PERMANENT ESTABLISHMENT IN GERMANY

Examples are:

• Manufacturing sites, with no sales,
• Points of storage, receipt and shipping,
• Mere points of brokerage,
• Sales points without their own purchasing.

Dependent offices are not entered in the Commercial Register. However, each site must be registered in the Business Register.

When foreign investors have to meet market and increasing administrative requirements in Germany the demand for a stronger presence of the enterprise in Germany will often increase as well. In many cases, establishing a fixed place of business or a facility represents the only way to support investors in meeting these requirements and to serve the business operations in Germany. Typically, this would be addressed by the formation of a permanent establishment in Germany.

A second benefit to mention is that both the setting up and the liquidating of a permanent establishment is easier and therefore more flexible than incorporating or liquidating a regular legal entity in Germany. Due to this fact a permanent establishment may already be profitable even though a foreign investor only wants to enter into a short period of business engagement in Germany.