In this article, the authors examine the evolution of the permanent establishment concept beginning with its “inception”, as reflected in article 5 of the OECD Model and its Commentaries. The article goes on to look at the challenges arising from the digital economy due to the complexity in determining which territory a business activity is connected to. Remote working has added an additional layer to these challenges. The authors look at both OECD and EU initiatives that have been introduced to clarify the PE notion in this evolving area of international taxation and conclude that a common PE definition can be achieved only once proposed directives have been transposed into domestic law, without exceptions.