In a recently published decision of 5 October 2012 (2C-708/2011), the Federal Supreme Court ruled on a case regarding the assignment of profits to a permanent establishment (PE) located in the Cayman Islands.

(a) Facts. X Finanz AG (hereinafter X AG or taxpayer), a Swiss-based corporation, is a wholly-owned subsidiary of the Swiss-based X Holding AG. The purpose of X AG is the financing of t…