Business profits taxation limited to residence unless a permanent establishment generates attributable profits for taxation elsewhere. Business profits are taxable only in the State of residence unless earned through a permanent establishment in the other Contracting State, in which case only profits attributable to that permanent establishment may be taxed there. Attribution is to be made as if the permanent establishment were a distinct and separate enterprise operating under similar conditions; deductions for expenses incurred for the PE's purposes are allowed subject to local tax law, but non reimbursed payments between PE and head office-such as royalties, fees, commissions, management charges and, except for banks, interest-are disallowed. Purchases alone do not create attributable profits, the attribution method must be applied consistently, and other treaty articles govern separately dealt with income.