Open AccessPERMANENT ESTABLISHMENT. THE CRISIS OF THE ARTICLE 5 OECD MC IN THE DIGITAL ECONOMY
Author(s) -
Montserrat Hermosín Álvarez
Publication year - 2021
Publication title -
crónica tributaria/crónica tributaria
Language(s) - English
Resource type - Journals
eISSN - 2695-7566
pISSN - 0210-2919
DOI - 10.47092/ct.21.3.4
Subject(s) - precept , typology , digital economy , context (archaeology) , set (abstract data type) , economics , economy , business model , business , economic system , market economy , political science , marketing , sociology , computer science , paleontology , anthropology , law , biology , programming language
The rise of the digital economy, breaking with business models that require a physical presence to develop their activities, has dislodged the traditional concept of permanent establishment set out in Article 5 OECD MC. In the light of the precept’s loopholes, large multinationals have engaged in abusive practices to relocate their profits, thus avoiding contributing in the States where the income is generated in accordance with their economic capacity. In this paper, we examine the concept of permanent establishment included in art. 5 OECD MC, its typology following the BEPS Project’s modifications and the different scenarios that do not constitute a permanent establishment. We also explore whether its legal regime continues to be useful in today’s context or whether, on the contrary, the moment has come to abandon the concept of permanent establishment entirely due to the problems generated by today’s article 5 OECD MC, unable to respond to the challenges posed by the digital economy.