Ruling on circumstances under which an internet server constitutes a PE

On 28 May 2007, the Italian tax authorities issued Ruling No. 119 addressing the circumstances under which a foreign company's Internet server constitutes a permanent establishment (PE) in Italy.

(a) Facts. A French company (the Company) offers online video game services to Italian customers. Such video games are neither produced nor updated by the Company. The customer downloads the video game after the installation of a "player", which is licensed free of ch…