Permanent establishment taxation: only profits attributable to the establishment and related local activities may be taxed in the other State. Profits of an enterprise are taxable only in its State of residence unless it carries on business in the other Contracting State through a permanent establishment, in which case only profits attributable to that establishment, related local sales of the same or similar goods, or other similar local activities may be taxed there; attribution follows the separate-enterprise principle, allows deductions for expenses incurred for the establishment subject to local law limits, disallows non-reimbursement charges between head office and establishment (with limited banking exceptions), excludes profit attribution for mere purchases, and requires consistent year-by-year application of the chosen method.
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 taxation: only profits attributable to the establishment and related local activities may be taxed in the other State.
Profits of an enterprise are taxable only in its State of residence unless it carries on business in the other Contracting State through a permanent establishment, in which case only profits attributable to that establishment, related local sales of the same or similar goods, or other similar local activities may be taxed there; attribution follows the separate-enterprise principle, allows deductions for expenses incurred for the establishment subject to local law limits, disallows non-reimbursement charges between head office and establishment (with limited banking exceptions), excludes profit attribution for mere purchases, and requires consistent year-by-year application of the chosen method.
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