Created a permanent establishment in Norway without noticing

What happened

A foreign contractor took a 9-month project in Norway. The client extended it twice — good news, commercially. At month 14 the company had a permanent establishment under the 12-month building-site rule, Norwegian corporate tax liability on the project profits, and no accounting set up to compute them. Nobody had decided this; it had simply happened.

Why it happens

PE is created by facts, not by intention or registration. Extensions are signed for commercial reasons by people who have never heard of the 12-month rule. Connected projects, the same site, a returning crew — the clock counts in ways contracts don't mention.

What it costs

Retroactive Norwegian taxation of project profits (computed under pressure, rarely in the company's favor), bookkeeping reconstruction, filing penalties — and in the worst cases, double taxation while the two countries' positions are untangled.

Warning signs

Any project crossing 9–10 months with extension talk. Multiple sequential contracts on the same site or for the same client. A fixed office "for convenience". Local staff with authority to sign.

The decision that would have prevented it

Re-run the PE analysis at every extension — before signing, not after. It is a 30-minute check that decides whether a signature moves the company's tax home.