Our tax team has advised a large multinational law firm with 26 offices worldwide on the taxation peculiarities of employing a Lithuanian employee and the risk of creating a permanent establishment. The main question of this issue was whether or not the US company, which has an employee in Lithuania, who works only in his home office and does not make any sales, could be treated as having a permanent establishment in Lithuania. Since the employee in Lithuania does not earn income himself, the basic problem was to precisely indicate all functions, risks and assets of the US company which could possibly be attributed to the permanent establishment in Lithuania.
