Luxembourg High Administrative Court indicates that a PE can ambulate within an office complex

A Luxembourg company (PSC) was unsuccessful in its arguments on appeal to the Luxembourg High Administrative Court that it acquired and held two companies through a permanent establishment (PE) in Malaysia. It was found not to be carrying on business at the alleged PE given that, inter alia, it had no employees and “a history of services rendered only on paper”.

The Court also noted that a PE generally required the presence of a distinct geographic location. The group owned all or part of three office towers in a complex in Malaysia, and PSC argued that the office space allocated to its Malaysian branch could change from one tower to another depending on operational needs – so that the three towers should be considered a single site. The Court responded:

Regarding the issue of the alleged branch's fixed location … the Court acknowledges that while it is entirely plausible for the allocation of an office to a branch within a complex consisting of three towers to vary over time, it remains that such an office should at all times be clearly identified.

However, this is manifestly not the case in this instance.

PSC’s appeal was dismissed.

Neal Armstrong. Summary of Cour Administrative, Case no. 50602C 17 June 2024 (Luxembourg High Administrative Court) under Treaties – Income Tax Conventions – Art. 5.