Business profits: taxation limited to residence unless a permanent establishment yields attributable profits taxable in the host state.

Taxation of business profits is limited to the resident State unless an enterprise carries on business in the other Contracting State through a permanent establishment, where only profits attributable to that establishment may be taxed. Profits must be attributed as if the establishment were a distinct and separate enterprise operating under similar conditions and dealing independently; deductions for expenses incurred for the establishment are allowed subject to domestic law, while non reimbursement transfers between establishment and head office (royalties, fees, commissions, management charges, and generally interest) are disallowed or ignored, with a banking exception for interest.

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