What is a permanent establishment?
Income tax treaties of developed countries typically include standard language defining the term permanent establishment that is based on the OECD Model Income Tax Convention.
An enterprise of one country will generally have a permanent establishment in the other country if it has either a fixed place of business (e.g. a place of management, a branch, office, factory, etc.) in the other country or it has a dependent agent in the other country who has the authority to conclude contracts binding the enterprise, and the agent habitually exercises that authority. It is irrelevant if the contract is signed in the home country – if the contract has been concluded in substance overseas, then a permanent establishment risk will remain.