Permanent establishment taxation limits taxing rights to profits attributable to the establishment under separate enterprise principles. Profits of an enterprise are taxable only in the State of residence unless business is carried on in the other Contracting State through a permanent establishment, in which case only profits attributable to that permanent establishment may be taxed there. Attributed profits are those the establishment would earn as a distinct and separate enterprise under similar conditions, with deductions allowed for expenses incurred for the establishment, including executive and general administrative expenses, subject to the taxing State's statutory limitations.