The situation
A German employer’s sales manager now working from home in Valencia
Your client, a machine-tool maker in Bielefeld, has agreed that its Iberian sales manager may work from her flat in Valencia. She visits customers in Spain and Portugal, negotiates prices and sends signed orders to Bielefeld. The company has no office in Spain. The finance director wants to know whether this creates a taxable presence there.
The tests are well known. The hours go on her actual working pattern, whether the company requires the home office or merely tolerates it, how far she negotiates and who accepts the orders. And on finding what the courts have made of similar facts, because the treaty text alone does not settle it.
What the research has to settle
The rules behind the answer
- Two routes to a permanent establishment
- A home office can be a fixed place of business if it is at the employer’s disposal, and an employee can create an agency permanent establishment through contract activity for the employer. The memo tests both.
- At whose disposal is the home office
- The OECD Commentary treats a home office as at the employer’s disposal where it is used continuously and the employer requires it, for example because no other workplace is provided. Home working for the employee’s own convenience points the other way. The Commentary has been revised, so the research confirms which version the analysis relies on.
- The agency test depends on the treaty wording
- Older treaty wording asks whether the employee habitually exercises an authority to conclude contracts. Wording introduced through the multilateral instrument also catches a principal role leading to contracts. Which applies depends on the treaty text in force between Germany and Spain.
- Her own tax and social security are separate
- Even without a permanent establishment, her salary for work done in Spain may be taxable there, and her social security follows Regulation 883/2004. The memo should flag both so they are not lost.
How it runs in azta
From the question to the document
The question, as you would type it
German GmbH, no Spanish entity. Sales manager lives in Valencia, works from home most days, negotiates prices with Spanish customers and forwards signed orders that Bielefeld accepts. Does this create a permanent establishment in Spain under the Germany–Spain treaty, and what changes would reduce the risk?
You start with
A German employer’s sales manager now working from home in Valencia
- 01
Describe how she works
Set out her days, her authority and how orders are accepted. azta searches the treaty, the German and Spanish tax acts and the EU social security rules.
Cited research· Free - 02
Find the decisions
Ask for decisions on home offices and dependent agents. azta searches the published case law it holds, including the German Federal Fiscal Court, and links each decision to its full text. Coverage varies by country.
Case-law search - 03
Weigh the options
Ask how limiting her authority, documenting the home-office choice or setting up a Spanish entity would change the analysis. Each answer cites the rule it rests on.
Cited research· Free - 04
Write the memo
Ask for a memo with the question, the two tests, the risk and the recommended changes. Edit it in Canvas for the board.
Canvas · Ask azta· Pro You send
A memo on the permanent establishment risk in Spain and how to limit it
What you get
A memo on the permanent establishment risk in Spain and how to limit it
Memo · draft
Sales activity in Spain: permanent establishment risk
Question. Whether the work of the Iberian sales manager from her home in Valencia creates a permanent establishment of the company in Spain, either through a fixed place of business or through her contract activity.
Fixed place of business. The company provides no workplace in Spain and expects her to work from Valencia. On those facts there is a real risk that the home office is treated as at the company’s disposal. Section 3 sets out the decisions on similar arrangements and what would reduce the risk.
Contract activity. She negotiates prices, but orders are accepted in Bielefeld. Whether that avoids an agency permanent establishment depends on the treaty wording in force and on whether Bielefeld in practice accepts whatever she agrees. We recommend recording the approval process and limiting her authority on prices.
Outcomes on your numbers
What azta is worth on this task
Pro pays for itself after
10 minutes a month
At €170 an hour, that is all the time Pro (€27 a month) has to take off your desk to cover its price.
Example figures. Replace them with your own.
- Hours back a year
- 43
- Capacity at your rate
- €7,344
- More PE risk memos a quarter
- 1.5
- Return on Pro
- 22.7×
- Research
- Drafting
- Your review
A scenario you set, not a promise. The hours that come back go to another client, or deeper into this one.
Want these numbers on your team’s real workload?
Book a demoSources azta searches here
- Gesetze im Internet
- Rechtsprechung im Internet
- BOE
- EUR-Lex · Curia
What stays with you
- Finding out how she actually works, from her and from the sales records.
- Judging how much risk the company is willing to accept.
- The advice to the board and your signature.
Frequently asked questions
- Does azta decide whether there is a permanent establishment?
- No. It researches the treaty, the national law and the decisions, and drafts the memo. The assessment of the facts is yours.
- Can I ask for Spanish court decisions?
- Yes. azta searches the published decisions it holds and shows what it cites. Coverage varies by country; the source register lists each collection.
- What about the employee’s own tax?
- Ask it as a follow-up. Her income tax and social security are separate questions, and azta researches them with the same citations.
