Foreign companies: is your liaison office a permanent establishment?
According to Article 2 of the Franco-German Non double tax treaty, if an employee of a liaison office in France does not have the power to:
- Sign on behalf of the company
Then the liaison office does not qualify as a permanent establishment.
However, care must be taken to clearly specify in the employment contract the role of the liaison office employee (he or she must not have negotiating power or the ability to sign on behalf of the company).
Otherwise, the liaison office could be qualified as a permanent establishment and the profits made by the latter will be taxable in France.
NB: a liaison or representation office is a type of company structure that does not have its own legal or fiscal autonomy.
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