PE rulings

CEO working from home in Denmark creates a PE

On 2 September 2024, the Danish Tax Board issued binding ruling SKM2024.432.SR, concluding that a Swedish company had established a permanent establishment (PE) in Denmark due to its Chief Executive Officer's (CEO) working partially from home in Denmark.

The CEO, a Danish resident, works from a home office in Denmark 40% of the time, with the remaining 60% spent at the company's offices in Sweden. While the company's overall management remains based in Sweden, the CEO performs key management duties for the Swedish company from Denmark.

The Danish Tax Board confirmed that the company's management seat remains in Sweden, as the majority of the CEO's management responsibilities are carried out there. However, the board concluded that the company had a PE in Denmark, primarily due to the CEO's significant influence on daily management decisions, which are partly made from Denmark.

According to the tax ruling, although the CEO's role does not target the Danish market directly, the structured and prearranged nature of the work from Denmark, amounting to 40% of the CEO's time, as well as the small size of the company, were decisive factors in the creation of a PE. The tax ruling aligns with previous decisions in which planned and sustained work from a home office was deemed sufficient to establish a PE.