Permanent Establishment and T/A 1 Procedures: 2026 Legal Risk Analysis

Labor mobility between Germany and Turkey has entered a new phase in 2026 with the widespread adoption of remote work models. For professionals employed by a German GmbH while residing in Turkey, permanent establishment risk and social security alignment are among the most critical legal aspects of this arrangement.

What Is a Permanent Establishment?
Under German tax law, a permanent establishment refers to a fixed place through which a company carries out its business activities on a continuous basis. If a managing director or key employee works from Turkey and engages in strategic decision-making, contract signing, or revenue-generating activities, this may create the perception that the German GmbH has a permanent establishment in Turkey. As a result, part of the company’s profits may become taxable in Turkey. To mitigate this risk, job descriptions, decision-making authority, and signing powers should be carefully restructured in line with international tax law and double taxation treaties.

T/A 1 Certificate: Protect Your Pension and Health Rights
Pursuant to the Social Security Agreement between Germany and Turkey, the social security status of individuals working from Turkey for a German employer must be clearly determined through the T/A 1 certificate or relevant exemption forms. This certificate ensures the continuation of pension contributions in Germany, prevents double social security contributions in Turkey, and preserves the right to access healthcare services in both countries.

Turkey Payroll and Cost Impact in 2026
As of 2026, the increase of the minimum wage in Turkey to TRY 28,075 affects not only local employees but also staff assigned from Germany or working remotely from Turkey. Differences in social security contribution ceilings and income tax brackets can change employer costs by approximately 15–20%. Therefore, payroll planning must be carried out with a coordinated assessment of both countries’ regulations.

Expert Opinion
Before deciding on a remote work model, conducting a detailed analysis within the framework of the Germany–Turkey Double Taxation Treaty is essential. A well-structured legal and tax framework protects both employees and employers from potential future risks and disputes.