Permanent establishment profit attribution limits taxation to profits attributable to the establishment under the separate enterprise principle.

Business profits are taxable only in the enterprise's resident State unless business is carried on in the other Contracting State through a permanent establishment, in which case only profits attributable to that establishment may be taxed there. Attribution follows the separate enterprise principle, allowing deductions for expenses incurred for the establishment subject to domestic limitations; customary apportionment methods may be used if they align with these principles. Purchases of goods by the establishment do not generate attributed profits, attribution methods should be applied consistently year to year, and other Articles govern separately dealt with income.

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