The article is devoted to one of the most controversial items of the Base Erosion and Profit Shifting (BEPS)-Project – Action 7, particularly the agency Permanent Establishment (PE) of Articles 5(5) and 5(6). Marking the threshold for source-state taxing rights, the PE has been at the centre of an entrenched debate since the concept’s emergence in the nineteenth century. Thus, working on the agency PE the OECD soon found itself caught between a rock and a hard place. With strong national interest for a high threshold on the one side and the increasing need to rebalance taxing rights due to globalization and the emergence of modern business models on the other side. This conflict shaped the consolations process and final output of Action 7. Ultimately, the Final Report settled for much less than the initially pursued globally supported holistic approach. The need for a substantial reform, however, remains and becomes more pressing with the introduction of unilateral measures. Moreover, with the agency PE in the spotlight, attention will inevitably be directed to the attribution of profits, an issue neglected in the BEPS Project. The inadequacies of the current attribution rules are examined in the second part of this article and a proposal is put forward.