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Building sites and construction and installation projects abroad are a key part of business for international machinery and plant engineering firms. So is the risk of unintentionally establishing a tax-relevant permanent establishment. For the first time since 1999, the new draft Federal Ministry of Finance Circular of 13 February 2026 has updated administrative practice on the concept of permanent establishments, again placing a particular focus on permanent establishments relating to building sites and construction and installation projects. Alongside the familiar duration thresholds and issues of attribution, the draft also shows that permanent establishment risks do not only arise from standard construction and installation activities. Accompanying planning, monitoring, and subsequent services, maintenance or repairs abroad, such as the long-term use of even very small spaces at the customer’s premises (e.g. a locker), may also establish a “general” permanent establishment under Art. 5(1) of the OECD Model Tax Convention. This article presents the main changes and evaluates their significance, particularly to machinery and plant engineering firms. For simplicity, in the following we will often refer simply to construction and installation projects, though building sites are also covered.

Whoever has been importing cement, iron and steel, aluminium, fertilisers, electricity or hydrogen into the EU since 1 January 2026 and has not yet heard of CBAM (Carbon Border Adjust-ment Mechanism), may well stand at the EU border and rub their eyes in bewilderment. Since then the definitive phase of the CBAM Regulation (EU) 2023/956 has been in force, and what was a simple reporting obligation has turned into compulsory compliance duties that already start with a digital customs declaration (e.g. reporting the correct document codes and any individual registrations). By 30 September 2027 at the latest affected businesses must comply with their reporting duties and submit the certificates they previously had to buy. To do this, auditable processes and documentation have to be set up and governance models created.

How does EaaS work and how can machinery and plant manufacturers take advantage of this model? What legal, tax and ESG aspects need to be considered? We answer the most crucial questions.