Permanent establishment principle limits taxation to profits attributable to the local fixed place of business under independent-enterprise standards. Taxation of business profits is confined to the enterprise's State of residence unless the enterprise operates in the other Contracting State through a permanent establishment, in which case only profits attributable to that establishment may be taxed there. Attributable profits are those the establishment would earn as a distinct and separate enterprise under similar conditions. Deductions are allowed for expenses incurred for the permanent establishment, including executive and general administrative expenses subject to local tax law limitations, and mere purchases of goods do not generate attributable profits.
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 limits taxation to profits attributable to the local fixed place of business under independent-enterprise standards.
Taxation of business profits is confined to the enterprise's State of residence unless the enterprise operates in the other Contracting State through a permanent establishment, in which case only profits attributable to that establishment may be taxed there. Attributable profits are those the establishment would earn as a distinct and separate enterprise under similar conditions. Deductions are allowed for expenses incurred for the permanent establishment, including executive and general administrative expenses subject to local tax law limitations, and mere purchases of goods do not generate attributable profits.
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