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Permanent Establishment: how the OECD intervened

The Beps project

The Base erosion & profit shifting (Beps), created by the OECD, is a project born with the aim to build an integrated fiscal system between the States, promoting common measures, and trying to remove fiscal avoidances, with the tool of the multilateral convention. The single state will then approve the convention with a confirmation law, introducing the new Beps measures in the country’s system. Regarding the permanent establishment, the focus was concentrated on the avoidance of the status (art.12-15), exemptions for specific activities and the anti-fragmentation rule.

The main problem with this method is its flexibility, since every state can decide not to apply certain aspects of the treaty, creating uncertainty on the width of the application of these measures, although some minimum standards were set. The multilateral convention was implemented from 1st July 2018, with 65 countries that already confirmed their acceptance.