logo

Can a remote worker constitute a Permanent Establishment?

LetsLaw / Derecho fiscal  / Can a remote worker constitute a Permanent Establishment?
¿PUEDE UN TRABAJADOR EN REMOTO CONSTITUIR UN ESTABLECIMIENTO PERMANENTE?

Can a remote worker constitute a Permanent Establishment?

The Directorate General of Taxes, in the binding consultation V0066-22 responded to an entity resident in the United Kingdom, on this matter.

 The consultation deals with the doubt that many people talk about after having experienced the COVID-19 situation, the existence or not of a permanent establishment for having an employee working remotely from his domicile in Spain. The consultation indicates that, once the confinement was concluded, the employee remained in Spain, spending more than 183 days during 2020. The entity did not pay accommodation expenses or any additional payments.

As a general rule the DGT, will consider the existence of a permanent establishment when there is a fixed place of business or through an agent on behalf of the company with powers to conclude contracts on behalf of the company.

Therefore, once this consultation has been analyzed, we can reach two conclusions as to when a fixed place of business is constituted. And regarding the figure of the independent agent.

According to the DGT, the fact that there is no continuous exercise of an activity in the domicile of an employee cannot be considered as a fixed place of business at the disposal of the company.

With the pandemic situation that was experienced in the world had to resort to teleworking, the DGT concludes that the use of the employee’s home in Spain is discontinuous and incidental. Therefore, this cannot be considered as giving rise to the existence of a permanent establishment of the British company in Spain.

The DGT also explains that, in the event that the employee decides to work from home voluntarily, even if he/she has a place provided by his/her employer to carry out his/her work, it is very difficult to consider that the employee’s home constitutes a fixed place of business at the disposal of the company.

In this specific consultation a series of reasons are exposed for which there would not exist Permanent Establishment, with which we can arrive at the conclusion after the exposed thing and of having read the consultation that there will not be PE if:

1. That the worker has decided to stay voluntarily at home to work.

2. That the company provides a place to work in the United Kingdom and that the company does not pay any expenses.

As mentioned at the beginning of the article, this consultation also refers to the figure of the Independent Agent.

In the case of this specific consultation, the employee cannot conclude contracts on behalf of the company, but he/she does carry out the main activity of the company.

According to the DGT, if the employee only works from home for exceptional and extraordinary circumstances or for the COVID, it would not be likely that this activity performed by the employee can be considered as usual.

In general, it would not be correct to consider that there is a permanent establishment when the place of business is maintained for less than six months.

In conclusion, the DGT considers that in this specific case, analyzed in this consultation, the company does not have a permanent establishment in Spain for an employee of the company in Spain, who performs his work from his domicile during the time that the pandemic measures lasted.

But what it does specify is that in the case that the worker extends his stay and permanence in Spain longer than the duration of the sanitary measures imposed by the Government due to the situation of the COVID-19 pandemic, in that case it would be necessary to analyze in detail if the worker would constitute a Permanent Establishment of the foreign company in Spain.

Contact Us

    By clicking on "Send" you accept our Privacy Policy - + Info

    I agree to receive outlined commercial communications from LETSLAW, S.L. in accordance with the provisions of our Privacy Policy - + Info