Permanent establishment rules allow taxation of profits attributable to a foreign PE under arm's length attribution. Profits of an enterprise may be taxed in the other Contracting State only to the extent attributable to a permanent establishment, determined as if the establishment were a separate enterprise under the arm's length principle. Deductions are allowed for expenses incurred for the permanent establishment, subject to local tax law limits, but not for non reimbursed charges between head office and establishment such as royalties, fees, commissions, management charges or, except for banks, interest. Apportionment customs may be used if consistent with these principles, and the method must be applied year to year unless changed for good reason.
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 allow taxation of profits attributable to a foreign PE under arm's length attribution.
Profits of an enterprise may be taxed in the other Contracting State only to the extent attributable to a permanent establishment, determined as if the establishment were a separate enterprise under the arm's length principle. Deductions are allowed for expenses incurred for the permanent establishment, subject to local tax law limits, but not for non reimbursed charges between head office and establishment such as royalties, fees, commissions, management charges or, except for banks, interest. Apportionment customs may be used if consistent with these principles, and the method must be applied year to year unless changed for good reason.
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