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Could a “server”, as computer equipment, constitute a Permanent Establishment (PE) in Portugal?

Permanent establishment
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Alexandre Andrade
According to Paragraph 1 of Article 5 of the Portuguese Corporate Tax Code, ‘‘Permanent Establishment’’ means a “fixed place of business through which the company carries out commercial, industrial or agricultural activities”.

According to Commentary 4 of the OECD Model Tax Convention, the term ‘‘place of business’’ covers “any premises, facilities or installations used for carrying on the business of the enterprise whether or not they are used exclusively for that purpose. A place of business may also exist where no premises are available or required for carrying on the business of the enterprise and it simply has a certain amount of space at its disposal.”

According to Commentary 42.4 of the OECD Model Tax Convention, computer equipment at a given location may only constitute a permanent establishment if it meets the requirement of being fixed.

From a legal and practical perspective, the server as a piece of computer equipment with a physical location in Portugal may constitute a PE of the company that operates that server if it meets the general requirements of a fixed installation through which an activity is carried on.
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