Permanent establishment principle allocates taxable profits to the location where business is carried on through a local presence. Profits of an enterprise are taxable in its State of residence unless it carries on business in the other Contracting State through a permanent establishment, in which case only profits attributable to that permanent establishment may be taxed there. Attribution is made by treating the permanent establishment as a distinct and separate enterprise engaged in similar activities and dealing independently, allowing deductions for expenses incurred for the permanent establishment subject to the tax law limitations of the State where it is situated. Purchases of goods by the permanent establishment do not, by themselves, generate attributable profits, and the same attribution method should be used year to year absent good reason to change.
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 principle allocates taxable profits to the location where business is carried on through a local presence.
Profits of an enterprise are taxable in its State of residence unless it carries on business in the other Contracting State through a permanent establishment, in which case only profits attributable to that permanent establishment may be taxed there. Attribution is made by treating the permanent establishment as a distinct and separate enterprise engaged in similar activities and dealing independently, allowing deductions for expenses incurred for the permanent establishment subject to the tax law limitations of the State where it is situated. Purchases of goods by the permanent establishment do not, by themselves, generate attributable profits, and the same attribution method should be used year to year absent good reason to change.
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