Permanent establishment threshold clarifies when short term projects create taxable presence and limits taxation to the relevant taxable period.

The protocol modifies permanent establishment treatment for site, project or similar activities spanning two taxable years: if, under the specified short term PE rules, the use, site, project or activity aggregates to less than thirty days in one taxable year, no PE is deemed to exist in that year; a PE will exist in the other taxable year and the enterprise is taxable in that other Contracting State only on income arising during that other taxable year.

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