CFC and PE?

[bnpsu]

I was thinking, how does it work in this case?

For example,

Person A is the owner of the business. He resides in Cayman Islands. He comes to Germany and opens a bank account there. And registers payment processing under a German address. He hires Person B to manage the business.
Person B lives in Germany. He uses Person A's bank account and business identity to manage the business.

In this situation? Where is tax liable? Is it a PE in Germany and owed taxes in Germany? Or is Person B just paid a salary and in reality it's Person A's business?

 

[NicolasMaduro]

bnpsu said:
He hires Person B to manage the business.
Person B lives in Germany.
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Since the business is managed by Person B, who lives in Germany, then the Permanent Establishment of the business is Germany. So the company is taxed in Germany.

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Why do Person A not just get a physical office in Cayman Islands, apply for payment processing from First Atlantic Commerce?

 

[bnpsu]

NicolasMaduro said:
Since the business is managed by Person B, who lives in Germany, then the Permanent Establishment of the business is Germany. So the company is taxed in Germany.

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Why do Person A not just get a physical office in Cayman Islands, apply for payment processing from First Atlantic Commerce?
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I see, hmm I mean, it's kind of like "reverse CFC in this case"?

If Person B is basically running the business online without any physical presence... how can the Person B's country prove this PE is there?

 

[NicolasMaduro]

bnpsu said:
I see, hmm I mean, it's kind of like "reverse CFC in this case"?

If Person B is basically running the business online without any physical presence... how can the Person B's country prove this PE is there?
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No. If Person B lives in GERMANY, and manages the company from GERMANY, then the business PE is Germany.

Also how do the Cayman Islands company even get a bank account in Germany?

 

[jackfrost]

dont f**k with the finanzamt. just dont do it. stay as far away from it as possible

 

[bnpsu]

jackfrost said:
dont f**k with the finanzamt. just dont do it. stay as far away from it as possible
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Thanks guys! Just hypothetical, same with Canada, AU, etc- as example with any other residential taxation