Mastering U.S. Permanent Establishment Tax Under New OECD Guidance vs. General Tax Treaty Approach

Navigating Income Attribution Rules in the U.S. Model Income Tax Convention and Recently Signed Tax Treaties

Recording of a 110-minute CPE webinar with Q&A

Conducted on Thursday, April 20, 2017
Recorded event now available

This CPE webinar will provide U.S. tax advisers and corporate tax executives with a practical guide to navigating the permanent establishment rules for foreign corporations conducting business in the United States. The panel will discuss the evolving standards for determining whether a foreign entity has a U.S. taxable presence and offer useful guidance in identifying and calculating income associated with that presence. The webinar will detail the recent OECD guidance on treaty-based attribution rules and contrast this approach with the application of U.S. domestic tax law and other U.S. income tax treaties.


An often complex challenge for U.S. corporate tax advisers of foreign companies is the allocation of U.S. taxable income arising from a “permanent establishment” (PE) in the United States. The critical first step in calculating such income and resulting U.S. tax obligations is determining what standards apply in deciding whether a foreign corporation has a PE that would create a taxable presence. U.S. domestic tax law often conflicts with specific tax treaty provisions, creating both risk and opportunity for corporate tax advisers, and recent OECD guidance likely will create further complications.

Foreign-based multinational companies conducting business in the United States face varied tax treatment of their income and activities, depending on whether the corporation’s country of residence has an income tax treaty with the United States. All U.S. bilateral income tax treaties contain a “permanent establishment” provision, which exempts a nonresident corporation’s business profits from taxation unless the profits are attributable to a permanent establishment within the host country. Depending on the tax rates in the treaty countries, creating a PE in the United States can either reduce or increase a foreign-based multinational’s foreign tax expense, and may be a useful planning tool.

The recent guidance from OECD would further complicates the process of calculating profits attributable to a PE. Under the OECD “authorized approach,” multinationals will be required to treat business units with a PE as “functionally separate entities” which will use arm’s length transfer pricing standards to calculate business profits subject to host country tax. Tax advisers to foreign-based multinationals need to have a working knowledge of the risks and opportunities involved with the OECD permanent establishment approach.

Our experienced panel will provide a practical and thorough approach to the evolving permanent establishment rules for foreign-based multinational companies with U.S. branch operations to minimize costly withholding, reporting requirements and significant tax and penalties.


  1. Effectively connected income vs. permanent establishment
  2. Business profits attributable to a permanent establishment under U.S. Treaties
  3. Authorized OECD approach
    1. Transfer-pricing guidelines
    2. Comparison to the 2016 U.S. Model Treaty
    3. Permanent establishment treated as “functionally separate entity”
  4. Forgoing treaty benefits
    1. A treaty’s reduction (possibly to 0%) of the Code’s standard 30% withholding tax on dividends, interest and royalties
    2. Future impact of forgoing treaty benefits
    3. Consistency principle


The panel will review these and other key issues:

  • What factors should tax advisers to multinationals consider when deciding what standard to use in determining whether to avail the branch of treaty benefits under a permanent establishment analysis?
  • What are the possible advantages of the new OECD “authorized approach” to multinationals with U.S.-based permanent establishment branches
  • When should a multinational elect to forego treaty benefits?

Learning Objectives

After completing this course, you will be able to:

  • Identify the benefits and burdens of new OECD “autorized approach” vs. existing U.S. treaty approach in calculating business profits directly attributable to a U.S. branch deemed to have a PE in the United States
  • Recognize when a U.S. branch of a foreign-domiciled multinational should consider foregoing tax treaty benefits
  • Ascertain when the OECD approach can lessen U.S. tax exposure through development of an integrated transfer pricing model
  • Determine filing requirements under various approaches to calculating and reporting business profits attributable to a U.S. permanent establishment.


William K. Norman, J.D., LL.M. (Taxation), Partner
Ord & Norman, Los Angeles

Mr. Norman practices as a tax lawyer. He limits his practice to international tax planning and compliance for high net worth individuals, corporations and joint ventures. He regularly works with U.S. businesses expanding overseas, foreign based businesses establishing operations in the United States, and multinational families on wealth transfer matters. He assists in-house staff of businesses and their outside tax professionals with filings, audits and appeals involving international tax issues and represents individuals in Overseas Delinquent Filings, Voluntary Disclosures and Streamlined Filing Procedures.

Dan Cassidy, CPA, Principal
Clark Nuber, Bellevue, Wash.

Mr. Cassidy is well-known for his expertise in the international arena, including tax planning, investment, and intellectual property issues. Prior to joining his firm, he worked in the U.S. International Tax Group at Deloitte & Touche in Calgary, Alberta. His practice includes structuring for inbound and outbound international business expansion and investment, consulting on domestic and international acquisitions and divestitures, planning with respect to the development and utilization of intellectual property, and tax planning and compliance for corporations and pass-through entities.

EA Credit

Enrolled Agent credit processing is available for an additional fee per person.

EA Processing $5.00


Recorded Event

Includes full event recording plus handouts.

Note: Self-study CPE and EA credits are not offered on recorded events.

Recorded Webinar Download $247.00

How does this work?

Recorded Audio Download (MP3) $247.00

How does this work?


National Registry of CPE Sponsors

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website:

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).

Program Materials

Requires Adobe Reader 8 or later. Download Acrobat FREE.

Program Materials

Requires Adobe Reader 8 or later. Download Acrobat FREE.

or call 1-800-926-7926

CPE Credit

Strafford is a NASBA CPE sponsor and our live webinars qualify for CPE credits. They offer you a high quality, cost effective, and convenient CPE option, with no lost travel time or expenses.

or call 1-800-926-7926

EA Credit

Strafford is an IRS approved continuing education provider and this course is approved for 2 enrolled agent (EA) credit hours.

or call 1-800-926-7926

Customer Reviews

I liked that the PowerPoint slides would automatically change as the speaker's presentation progressed.

Zeeshan Elahi


I found the presenters to be very experienced and the Q&A's to be particularly useful.

Mike O'Brien

American Eagle Outfitters

Provided a lot of information. Examples made it easier to put in everyday perspective.

Therese Au

Forsythe Technology

It was an excellent program!!

Marni Odermann


I liked the clear and concise manner in which the topics were presented.

Angelina Johnson-Brown

General Electric Company

or call 1-800-926-7926

Federal Income Tax Advisory Board

David Bowen


Grant Thornton

Joseph Calianno

Partner, National Tax Office International Tax


Edward Froelich

Of Counsel

Morrison & Foerster

George Manousos



Christian M. McBurney


Arent Fox

Alex Sadler


Morgan Lewis

Susan Seabrook


Buchanan Ingersoll & Rooney

Tom Windram

Managing Director & National Leader, Federal Tax Credits & Incentives

RSM McGladrey

or call 1-800-926-7926

Our Guarantee

Strafford webinars are backed by our 100% Unconditional Money-Back Guarantee: if you are not satisfied with any of our products, simply let us know and get a full refund. For more information regarding complaints and refunds, please contact us at 1-800-926-7926 ext 10. Complaints regarding this program can be submitted via the course evaluation found in the “Thank you” e-mail at the end of the course.