Permanent establishment profit attribution limits taxation to profits attributable to the PE under a separate-enterprise principle. Taxation of business profits is limited to the State of the enterprise unless the enterprise carries on business in the other State through a permanent establishment, in which case only profits attributable to that PE may be taxed there. Profits attributable to a PE are determined on the separate enterprise basis; allowable deductions include expenses incurred for the PE, subject to local tax law limits, but not notional payments between PE and head office (except reimbursements and certain banking interest), and profits from mere purchase of goods are not attributed to the PE.
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 profit attribution limits taxation to profits attributable to the PE under a separate-enterprise principle.
Taxation of business profits is limited to the State of the enterprise unless the enterprise carries on business in the other State through a permanent establishment, in which case only profits attributable to that PE may be taxed there. Profits attributable to a PE are determined on the separate enterprise basis; allowable deductions include expenses incurred for the PE, subject to local tax law limits, but not notional payments between PE and head office (except reimbursements and certain banking interest), and profits from mere purchase of goods are not attributed to the PE.
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