Whether a person who works repeatedly but only for short periods in a tax treaty contracting state constitutes a permanent establishment (or a fixed base for purposes of Article 14 OECD MC 2000) is subject of heated debate in the international tax environment. In its decision of November 26th, 2025, Ra 2024/15/0036, the Austrian Administrative Court had to assess whether a dentist resident in Germany who had performed dental treatment for prisoners in three Austrian prisons for only a few hours a week or every two weeks had established a “fixed base" regularly available to him for the purpose of performing his activities according to Article 14(1) of the Austrian-German tax treaty covering income from independent personal services. The court confirmed the requirement of interpreting tax treaty provisions that correspond to the OECD Model Tax Convention (OECD MC) according to the version of the Commentary available at the time of signature of the respective tax treaty. The court further held that the term “fixed base" is equivalent to the term “fixed place of business" within the meaning of Article 5(1) OECD MC. In material terms, the Austrian Administrative Court decided that the German dentist had a fixed base in Austria through which his work was partly carried on, although he only had limited access to the premises in the Austrian prisons for certain contractually agreed short periods of time only, as required for purposes of the dental treatments. Stefan Bendlinger takes a critical look at the Austrian Administrative Court’s decision and its practical implications.
