Tax
Permanent establishment
Also known as PE
A permanent establishment is a fixed place of business, or a dependent agent habitually concluding contracts, that gives a country the right to tax a foreign company's business profits. Permanent establishment thresholds are usually set by tax treaty and determine when cross-border activity becomes locally taxable.
In plain terms: Enough presence in a country that it can tax your company there.
Why it matters
The risk cuts both ways for founders. A US company with a full-time worker abroad can create a taxable presence in that country; equally, hiring someone in the US who signs contracts can create US exposure for a foreign company.
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