Permanent establishment: profits attributable to it may be taxed in the host state when business is carried on there.

Profits are taxable only in the State of residence unless the enterprise carries on business in the other Contracting State through a permanent establishment, in which case only profits attributable to that permanent establishment may be taxed there. Attribution follows the separate enterprise principle, allowing deductions for expenses incurred for the permanent establishment subject to host State tax law, while disallowing non reimbursement payments between head office and permanent establishment for royalties, management charges, commissions and, except for banks, interest; customary apportionment and consistency rules also apply.

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