Permanent establishment rules limit taxation to profits attributable to the local fixed presence, with specific expense and intercompany charge restrictions. An enterprise's profits are taxable only in its State of residence unless it operates in the other State through a permanent establishment, in which case only profits attributable to that permanent establishment may be taxed there. Attributable profits are those the permanent establishment would earn as a distinct and separate enterprise under similar conditions, allowing deductions for expenses incurred for the permanent establishment subject to domestic deductibility rules, with restrictions on non reimbursed royalties, management charges, commissions and, except for banks, interest.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Permanent establishment rules limit taxation to profits attributable to the local fixed presence, with specific expense and intercompany charge restrictions.
An enterprise's profits are taxable only in its State of residence unless it operates in the other State through a permanent establishment, in which case only profits attributable to that permanent establishment may be taxed there. Attributable profits are those the permanent establishment would earn as a distinct and separate enterprise under similar conditions, allowing deductions for expenses incurred for the permanent establishment subject to domestic deductibility rules, with restrictions on non reimbursed royalties, management charges, commissions and, except for banks, interest.
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