Business profits taxable in resident state unless attributable to a permanent establishment; attributed profits follow separate enterprise treatment. Profits are taxable in the enterprise's 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 and sales of similar goods in that State may be taxed there. Profits attributable to the permanent establishment are determined as if it were a distinct and separate enterprise under similar conditions. Deductions are allowed for expenses incurred for the permanent establishment's business, but payments to or from the head office (other than reimbursement of actual expenses) for royalties, fees, commissions, management services, or interest (except for banking) are excluded. Apportionment methods customary in a Contracting State are permissible if they conform to these principles; purchases alone do not give rise to attributed profits, and the attribution method should be applied consistently year by year.
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 taxable in resident state unless attributable to a permanent establishment; attributed profits follow separate enterprise treatment.
Profits are taxable in the enterprise's 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 and sales of similar goods in that State may be taxed there. Profits attributable to the permanent establishment are determined as if it were a distinct and separate enterprise under similar conditions. Deductions are allowed for expenses incurred for the permanent establishment's business, but payments to or from the head office (other than reimbursement of actual expenses) for royalties, fees, commissions, management services, or interest (except for banking) are excluded. Apportionment methods customary in a Contracting State are permissible if they conform to these principles; purchases alone do not give rise to attributed profits, and the attribution method should be applied consistently year by year.
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