Article 5 - Permanent establishment

Understanding Permanent Establishment Under Article 5 of Uruguay's DTAA: Key Definitions and Exceptions Explained

Article 5 of the Double Taxation Avoidance Agreement (DTAA) between Uruguay and another contracting state defines 'permanent establishment' as a fixed place of business where an enterprise's activities are conducted. It includes places like management offices, branches, factories, and mines, among others. Certain activities, such as construction projects lasting over 183 days or service provision exceeding 90 days, also qualify. However, activities of a preparatory or auxiliary nature, such as storage or information collection, do not constitute a permanent establishment. Agents with authority to conclude contracts or regularly deliver goods on behalf of an enterprise may establish a permanent establishment unless they are independent agents. Insurance enterprises collecting premiums or insuring risks in another state are also deemed to have a permanent establishment. Control relationships between companies do not automatically create a permanent establishment.