Business profits taxation limited to residence unless permanent establishment permits taxation on attributable profits. The treaty confines taxation of an enterprise's profits to its State of residence unless the enterprise operates in the other State through a permanent establishment, in which case only profits attributable to that permanent establishment, related local sales, or similar local activities may be taxed there. Profits are attributed by treating the permanent establishment as a distinct and separate enterprise dealing independently; estimates are permitted where determination is difficult. Deductions are allowed for expenses incurred for the establishment's business subject to local tax law, but not for non reimbursed charges between head office and establishment such as royalties, commissions, management charges or, except for banks, interest.
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 unless permanent establishment permits taxation on attributable profits.
The treaty confines taxation of an enterprise's profits to its State of residence unless the enterprise operates in the other State through a permanent establishment, in which case only profits attributable to that permanent establishment, related local sales, or similar local activities may be taxed there. Profits are attributed by treating the permanent establishment as a distinct and separate enterprise dealing independently; estimates are permitted where determination is difficult. Deductions are allowed for expenses incurred for the establishment's business subject to local tax law, but not for non reimbursed charges between head office and establishment such as royalties, commissions, management charges or, except for banks, interest.
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