Business profits allocation: taxable in residence unless attributable to a permanent establishment in the source State.

Profits are taxable in the State of residence except where business is carried on in the other Contracting State through a permanent establishment; only profits attributable to that permanent establishment may be taxed there. Attribution follows the distinct and separate enterprise principle, allowing deductions for expenses incurred for the permanent establishment under the host State's tax rules while disallowing non expense transfers between head office and permanent establishment such as royalties, management charges or, except for banks, interest. Apportionment customs may be retained if consistent with these principles, and attribution methods should be applied consistently year to year.

---

---

---