This work is the result of an extensive research into the permanent establishment concept, a concept that plays a vital role within the international taxation system through the fair allocation of taxing rights over cross-border business profits in the context of the tenuous balance between the residence and source principles, as a threshold for source taxation. Our research sought to explore and explain the evolution of this concept in the context of recent changes resulting from the joint work of the G20 and the OECD, namely under the aegis of the BEPS Project (Action 7), and later with the enactment of the Multilateral Instrument and the update to the OECD Model Convention. We also address the Portuguese permanent establishment concept and, finally, the future of the permanent establishment concept within the international taxation system.