Business profits attribution: permanent establishments may be taxed only on profits attributable to their independent activities. Business profits are taxable only in the State of residence unless an enterprise carries on business through a permanent establishment in the other State, in which case only profits attributable to that permanent establishment may be taxed there. Attributed profits must reflect what the permanent establishment would earn as a distinct and separate enterprise dealing independently, allowing deductions for expenses incurred for the permanent establishment subject to local tax law limits, while excluding inter-office charges (other than reimbursements) for royalties, fees, commissions, management charges and, except for banking, 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.
Business profits attribution: permanent establishments may be taxed only on profits attributable to their independent activities.
Business profits are taxable only in the State of residence unless an enterprise carries on business through a permanent establishment in the other State, in which case only profits attributable to that permanent establishment may be taxed there. Attributed profits must reflect what the permanent establishment would earn as a distinct and separate enterprise dealing independently, allowing deductions for expenses incurred for the permanent establishment subject to local tax law limits, while excluding inter-office charges (other than reimbursements) for royalties, fees, commissions, management charges and, except for banking, interest.
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