Permanent establishment principle: business profits taxable where PE operates; attribution follows arm's length separate enterprise rule. Profits of an enterprise are taxable only in the resident State unless the enterprise carries on business in the other State through a permanent establishment, in which case only profits attributable to that permanent establishment may be taxed there. Attribution must follow the separate enterprise principle, allowing deductions for expenses incurred for the permanent establishment, permitting customary apportionment methods consistent with the Article, excluding mere purchase activity, and applying the chosen attribution method year by year unless good reason exists 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: business profits taxable where PE operates; attribution follows arm's length separate enterprise rule.
Profits of an enterprise are taxable only in the resident State unless the enterprise carries on business in the other State through a permanent establishment, in which case only profits attributable to that permanent establishment may be taxed there. Attribution must follow the separate enterprise principle, allowing deductions for expenses incurred for the permanent establishment, permitting customary apportionment methods consistent with the Article, excluding mere purchase activity, and applying the chosen attribution method year by year unless good reason exists to change.
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