LTD and Permanent Establishment

I need help with PE issue.

Its a foreign construction company that carries work in Ireland. Accordig to Double Taxation Treaty between that country and Ireland a construction site becomes PE only when work exceeds 12 months. That is not an issue but....

The company was working in Ireland for the period of 10 months and then they switched into another company from their group that carried work in Ireland for another 8 months.

Company A spent 10 months on one construction site in Ireland. Then they fired all their employees employed in Ireland and formed Company B (also located in a foreign state)

The next day Company B hired all employees previously employed by Company A and continued work for another 8 months.


Both companies were an equivalent of Irish LTD so they have separate legal entity (same owner though)

Since they have the same owner and management they would form something called a Group am I correct?

Would then an entire group be counted as of time present in Ireland or each company separately as they are different legal entities regardless of ownership?

The old after the fact tax queries.

To which Double Taxation Treaty are you referring? You need to look at any anti avoidance provisions for entities under common control which may or may be included in the Treaty.

Are the employment contracts concluded in Ireland, are there contractors with Irish Subcontractors concluded in Ireland? where was the variation in the terms of the building contract agreed?

A common convention
A person acting in a Contracting State on behalf of an enterprise of the other Contracting State - other than an agent of independent status to whom the provisions of paragraph (6) of this Article apply - shall be deemed to be a permanent establishment in the first-mentioned State if he has, and habitually exercises in that State, an authority to conclude contracts in the name of the enterprise, unless his activities are limited to the purchase of goods or merchandise for the enterprise.

International taxation is not my area but ten months and then transfer to a related Company is not the cleanest proposal I've ever seen.

Thanks for your reply Joe. It's Denmark. The treaty states:

Art.5.3
A building site or construction or installation project constitutes a permanent establishment only if it lasts more than twelve months.

A company is using subcontractors and have 1 employee full time here. That employee does not have powers to represent the company or sign contracts.