Ireland Fact-File Part 2:
Individual Business Domestic Taxation

2.2 Ireland Permanent Establishment

Creation of a permanent establishment

A (tax resident) permanent establishment in Ireland is created when there is a fixed place of business (ie a place of management, branch, office, workshop, factory, mine, or long-standing construction site) in the Republic, via which the enterprise's business activities are carried out.

There are a number of cases (usually when the activity being undertaken in the Irish arm is preparatory or auxiliary to the company's main activity) in which an operation will not be considered to be a permanent establishment.

In addition, businesses will not generally be deemed to have a permanent establishment in Ireland if they carry on business there through a broker or other independent agent.

The concept of a permanent establishment is a problematic one for, for example, individuals involved principally in e-commerce activity, given that such activities have traditionally had the advantage of being somewhat ‘portable', for tax purposes; in addition to 'dematerialising' transactions to a certain extent, a company can have various departments in different countries, but connected via the internet, making it difficult for taxing authorities to tell where the ‘main' base of operations is (although this is less likely to be of interest to a smaller business or sole trader).

There have been various attempts at an international level to ‘pin down' e-commerce operations in this regard, none particularly successful, as yet.