Court of Appeal rules that a commissionaire company constitutes an agency PE of its principal company

Abstract

On March 2, 2011, a Norwegian Court of Appeal ruled that Dell AS, a Norwegian commissionaire company, constituted a dependent sales agency permanent establishment (PE) in Norway for its undisclosed Irish principal. There was considerable difference in opinion between Dell and the Norwegian tax authorities about the facts of the case, despite the supporting documentary evidence presented by Dell. The taxpayer argued that the structure accurately reflected its commercial model, that the principal company had significant substance, and that any non-standard contracts entered into by Dell AS were discussed with the principal as the contract negotiations proceeded. The Norwegian tax authorities disagreed with this fact pattern, which was borne out by their functional analysis supporting their profit allocation to the Norwegian PE.