Business profits: taxation limited to residence state unless attributable to a permanent establishment, then taxed on attributable profits. Profits of an enterprise are taxable only in its State of residence unless business is carried on through a permanent establishment in the other State; where a permanent establishment exists, only profits attributable to it may be taxed there. Attribution follows the separate enterprise principle, allowing deductions for expenses incurred for the permanent establishment as if it were a distinct enterprise, subject to local rules for executive and administrative expenses and disallowing attribution based solely on purchases. The same method for determining profits should be used year to year, and items governed by other Articles remain unaffected.
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: taxation limited to residence state unless attributable to a permanent establishment, then taxed on attributable profits.
Profits of an enterprise are taxable only in its State of residence unless business is carried on through a permanent establishment in the other State; where a permanent establishment exists, only profits attributable to it may be taxed there. Attribution follows the separate enterprise principle, allowing deductions for expenses incurred for the permanent establishment as if it were a distinct enterprise, subject to local rules for executive and administrative expenses and disallowing attribution based solely on purchases. The same method for determining profits should be used year to year, and items governed by other Articles remain unaffected.
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