Betriebsstätte

Betriebsstätte is a German legal and tax term referring to a fixed place of business through which the business of an enterprise is wholly or partly carried on. It is a crucial concept for determining where a company is subject to taxation and where its economic activities are deemed to occur.

The definition of a Betriebsstätte is broad and can include various locations such as a place of management, a branch office, a factory, a workshop, a mine, or even a construction site that lasts for a certain period. The key element is the fixed nature of the location and the continuous or regular carrying on of business activities. A temporary presence or occasional activities generally do not constitute a Betriebsstätte.

For tax purposes, a Betriebsstätte is essential for allocating taxing rights between different countries. If a company has a Betriebsstätte in a country other than its country of residence, that country may have the right to tax the profits attributable to that Betriebsstätte. This is often governed by bilateral double taxation treaties, which provide detailed rules on when a Betriebsstätte is deemed to exist and how profits are to be allocated.

The precise definition and implications of a Betriebsstätte can vary depending on the specific tax laws of a country and the provisions of applicable double taxation agreements. Understanding this concept is therefore vital for businesses operating internationally to ensure compliance with tax regulations and avoid double taxation.