In a recently published ruling, the Austrian Ministry of Finance dealt with the question whether the Austrian home office of an Austrian tax resident employee can qualify as an Austrian permanent establishment of a non-Austrian enterprise (EAS 3415).

A permanent establishment ("PE") for Austrian domestic tax purposes is a fixed place through which an enterprise's business is carried out. According to the Ministry of Finance, also the Austrian situated private flat of an employee can qualify as a PE of a foreign enterprise if the employee renders his/her work at least partly from such home office. In that respect it is already sufficient that the employee to a minor extent carries out the enterprise's business from his/her home office by using a laptop and a mobile phone provided by the enterprise.

As regards the question whether a home office may qualify as a permanent establishment for treaty purposes, the Ministry refers to para. 18 of the Commentary to art. 5 of the OECD Model Convention. Pursuant thereto, a home office does not qualify as a PE if it is only intermittently or incidentally used by the employee (as in that case, the home office is not at the disposal of the enterprise). Where, however, a home office is used on a continuous basis for carrying on business activities for an enterprise and it is clear from the facts and circumstances that the enterprise has required the individual to use that location to carry on the enterprise's business (e.g., by not providing an office to an employee in circumstances where the nature of the employment clearly requires an office), the home office may be considered to be at the disposal of the enterprise and thus qualify as a PE for treaty purposes.

Pursuant to the Austrian Ministry of Finance, an indication for qualification of a home office as a PE is that the employee claims tax-deductible expenses in connection with the home office. Further, if the employee renders activities from his/her home office that comply with the main activity of the enterprise, such activities will not be mere supporting activities and will thus lead to a PE for treaty purposes.