<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>The article analyzes whether the investment in a private equity fund may create a permanent establishment (PE) for foreign investors. The analysis is divided into two main parts, as the question of creating a PE for the foreign investors is considered with respect to both the main PE rule and the agency PE rule. The amendments to the PE definition prescribed in the OECD/G20 BEPS report on Action 7, and incorporated into the 2017 version of the OECD Model with Commentary, are taken into consideration. It is concluded that the final outcome depends on the specific setup of the private equity fund at hand and that some degree of uncertainty may often remain. Moreover, the recent amendments to the PE definition do not appear to have reduced this uncertainty—rather the contrary.</p></abstract>

The article analyzes whether the investment in a private equity fund may create a permanent establishment (PE) for foreign investors. The analysis is divided into two main parts, as the question of creating a PE for the foreign investors is considered with respect to both the main PE rule and the agency PE rule. The amendments to the PE definition prescribed in the OECD/G20 BEPS report on Action 7, and incorporated into the 2017 version of the OECD Model with Commentary, are taken into consideration. It is concluded that the final outcome depends on the specific setup of the private equity fund at hand and that some degree of uncertainty may often remain. Moreover, the recent amendments to the PE definition do not appear to have reduced this uncertainty—rather the contrary.

Permanent Establishment for Investors in Private Equity Funds—A Legal Analysis in Light of the Changes to the OECD Model (2017)

Nordic Tax Journal

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

The article analyzes whether the investment in a private equity fund may create a permanent establishment (PE) for foreign investors. The analysis is divided...

Permanent Establishment for Investors in Private Equity Funds—A Legal Analysis in Light of the Changes to the OECD Model (2017)

Article Category: Article

Published Online: Jun 15, 2019

Page range: 16 - 40

Received: Oct 12, 2018

Accepted: Jan 12, 2019

DOI: https://doi.org/10.1515/ntaxj-2019-0002

Keywords
Private equity funds, international tax law, permanent establishment, dependent agent, BEPS, international tax policy

© 2019 P. Koerver Schmidt, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

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Permanent Establishment for Investors in Private Equity Funds—A Legal Analysis in Light of the Changes to the OECD Model (2017)

Article Category: Article

Published Online: Jun 15, 2019

Page range: 16 - 40

Received: Oct 12, 2018

Accepted: Jan 12, 2019

DOI: https://doi.org/10.1515/ntaxj-2019-0002

KeywordsPrivate equity funds, international tax law, permanent establishment, dependent agent, BEPS, international tax policy

© 2019 P. Koerver Schmidt, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Figure 1

Figure 2

Figure 3

Figure 4

Figure 5

Keywords
Private equity funds, international tax law, permanent establishment, dependent agent, BEPS, international tax policy