Does a US employeecreate a taxable presence.
Usually yes, at state level. A person working in a state generally creates a filing and tax obligation there, whatever your company is incorporated as. Teamed tracks where that bites.
Two different risks
The word people use and the thing that actually happens
Permanent establishment is a treaty concept. It decides whether a foreign company owes United States federal tax on its business profits, and it is genuinely hard to trigger by accident if your activity is limited. State nexus is a separate idea with a much lower threshold, it is what most companies actually run into, and it is barely mentioned in the conversations where people worry about permanent establishment.
- Federal permanent establishment
- A treaty question, higher threshold
- State nexus
- A state law question, much lower threshold
- Usual trigger
- A person working in the state
- Does Delaware incorporation shield you
- No
- Does a Delaware address help
- No, if nobody works there
- Delaware corporate income tax
- 8.7%, only if you do business in Delaware
Why the federal question is usually the wrong one
Permanent establishment is the higher bar
Most double tax treaties give a foreign company protection from United States federal tax on business profits unless it has a permanent establishment, broadly a fixed place of business or a dependent agent habitually concluding contracts. That is a real threshold and a company with a single remote employee doing non contracting work may well sit below it.
This is the framing that reaches most people, because it is the one that applies in the countries they came from. It leads to a reassuring conclusion and the wrong bill, because the tax that arrives is usually not federal.
The one that actually bites
A person in a state is usually enough
States set their own rules and they are not bound by the treaty analysis. In most states an employee physically working there creates nexus for that state's taxes and, separately and immediately, an obligation to register as an employer, withhold state income tax where it exists, and pay state unemployment insurance.
That employment obligation does not wait for a threshold and does not care what your company is incorporated as. It attaches to the fact that somebody is doing work in the state. This is why a company can be comfortably outside federal permanent establishment and still owe registrations, filings and tax in three states.
There is a federal statute, Public Law 86-272, that protects some out of state sellers from a state's net income tax. Its protection is narrow. It covers solicitation of orders for tangible goods and nothing else, so it does not help a services business and does not help where an employee does more than solicit.
The thing Delaware does not do
Incorporating in Delaware moves nothing
A Delaware certificate decides where your company exists as a legal person. It has no effect on where your people are, and nexus follows the people.
Delaware's own 8.7% corporate income tax applies to companies doing business in Delaware, so a Delaware company with nobody in Delaware generally owes Delaware nothing on income. That is the part people hear. The part they miss is that the same reasoning puts the obligation somewhere else rather than nowhere.
If a registered agent's address were enough to place a company somewhere for tax, every company in America would be registered in the cheapest state. It is not, and they are not.
What to watch
The moves that quietly change your footprint
The common way a footprint grows is not a decision. It is somebody relocating. An employee moving state during a year can create a new registration obligation in the state they moved to, sometimes with back filings from the date they arrived, and the company usually learns about it afterwards.
The others worth watching are a contractor whose working pattern makes them look like an employee, somebody signing contracts from a state where you have no presence, and holding any kind of fixed premises. None of these are exotic. They are just easy to miss when nobody is asked to report them.
Before you commit
Sometimes an employer of record is the better fit
Not every team needs its own company to solve this. If the group in the United States is small or spread thinly across several states, an employer of record already holds the registrations in each of them, and that can be the better answer rather than a lesser one. An entity means taking those registrations on yourself, in every state where somebody works.
Contractors, employer of record and your own entity all run on one platform at Teamed, so moving between them later does not mean changing provider or re-onboarding anybody. Real HR and legal experts handle the work rather than a ticket queue.
Talk to a member of the team and we will tell you plainly which one suits where you are. If you would rather look at the numbers yourself first, the crossover calculator models it on local salaries and employer costs rather than on a headcount rule of thumb.
Who carries it
Your own entity, when it's time. We set it up, migrate you in, and hand it back intact.
Global Entity and Employment Operations, which we call GEMO, is how Teamed forms your company, registers it for tax and payroll, runs it month to month and keeps its filings current, across 100+ countries. You stay the employer. We do the work behind it.
Teamed's American entity is Teamed US Inc., a Delaware corporation, and the state by state registration work described above is the part our team does every time a client hires somebody in a new state.
They set up our EU entity and moved hires across without missing a payroll.
Questions
Questions people ask about US tax presence
Does one remote employee in the US create a permanent establishment?
For federal treaty purposes, not necessarily, since permanent establishment is a relatively high bar. For state purposes it usually does not matter, because a person working in a state normally creates an employer registration and tax obligation there regardless of the federal analysis.
Does incorporating in Delaware protect us from tax in other states?
No. A Delaware certificate decides where the company legally exists. Tax and employment obligations follow where people actually work. A Delaware company with staff in three states deals with those three states.
What is Public Law 86-272?
A federal statute that stops a state taxing the net income of an out of state seller whose only activity there is soliciting orders for tangible goods. It is narrower than people hope. It does not protect services businesses, and it does not protect an employee doing more than soliciting.
An employee moved to another state. Does that matter?
Usually yes. Working in a new state typically creates registration and withholding obligations there from the date they arrive, sometimes with back filings. Relocations are the most common way a company's state footprint grows without a decision being taken.
Does Delaware charge us corporate income tax if we have no one there?
Generally no. Delaware's 8.7% corporate income tax applies to corporations doing business in Delaware. The point to take from that is not that the tax disappears, but that it lands in the states where the work actually happens.
Where these figures come from
Sources
The 8.7% rate and the doing business test were read from the Delaware Division of Revenue on 17 September 2026. Treaty permanent establishment and state nexus are described here as principles rather than as figures, because both turn on facts specific to a company and a state.
Looking for a job in Permanent Establishment Risk yourself? Teamed does not hire people directly. Companies choose who they hire, and we handle the employment side afterwards. Here is why we cannot help with your search.