On February 13th, 2026, the German Federal Ministry of Finance (MoF) published a draft decree on administrative guidelines governing definition and constitution of a permanent establishment (PE) under German domestic and international tax law. The MoF addresses both the interpretation of the PE definition in Sections 12 and 13 German Fiscal Code as well as the PE concept in Articles 7 and 5 OECD Model determining the right of a contracting state to tax business profits of an enterprise resident in the other contracting state. The draft decree aims to systematically and practically analyze the Federal Fiscal Court’s case law, taking into account current developments such as those resulting form the 2025 Update to the OECD Model and the corresponding Commentary. Given that the PE definition in Sections 12 and 13 German Fiscal Code in fact is identical to Section 29 Austrian Fiscal Code and administrative practice in both states follows the Commentary on Art 5 OECD Model in interpreting tax treaties, the German comments on the PE definition have a certain relevance from an Austrian perspective as well. Stefan Bendlinger provides an overview of and comments on the contents of the draft decree.
