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CFC and PE?

bnpsu

Mentor Group Gold
I was thinking, how does it work in this case?

For example,

Person A is the owner of the business. He resides in Cayman Islands. He comes to Germany and opens a bank account there. And registers payment processing under a German address. He hires Person B to manage the business.
Person B lives in Germany. He uses Person A's bank account and business identity to manage the business.

In this situation? Where is tax liable? Is it a PE in Germany and owed taxes in Germany? Or is Person B just paid a salary and in reality it's Person A's business?
 

NicolasMaduro

Active Member
He hires Person B to manage the business.
Person B lives in Germany.
Since the business is managed by Person B, who lives in Germany, then the Permanent Establishment of the business is Germany. So the company is taxed in Germany.

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Why do Person A not just get a physical office in Cayman Islands, apply for payment processing from First Atlantic Commerce?
 

bnpsu

Mentor Group Gold
Since the business is managed by Person B, who lives in Germany, then the Permanent Establishment of the business is Germany. So the company is taxed in Germany.

-

Why do Person A not just get a physical office in Cayman Islands, apply for payment processing from First Atlantic Commerce?
I see, hmm I mean, it's kind of like "reverse CFC in this case"?

If Person B is basically running the business online without any physical presence... how can the Person B's country prove this PE is there?
 

NicolasMaduro

Active Member
I see, hmm I mean, it's kind of like "reverse CFC in this case"?

If Person B is basically running the business online without any physical presence... how can the Person B's country prove this PE is there?
No. If Person B lives in GERMANY, and manages the company from GERMANY, then the business PE is Germany.

Also how do the Cayman Islands company even get a bank account in Germany?
 
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