Permanent establishment determines taxable business profits: only profits attributable to the PE may be taxed in the other State. Profits are taxable in the resident State unless an enterprise carries on business in the other State through a permanent establishment; then only profits attributable to the PE may be taxed there. Attribution follows the distinct-and-separate enterprise (arm's length) principle. Deductible expenses incurred for the PE are allowed, but payments from the PE to head office (other than reimbursements) for royalties, fees, commissions, management charges or, except for banks, interest, are not deductible nor are reciprocal charges taken into account. Customary apportionment, no attribution for mere purchases, and consistent year to year methods are permitted.
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 determines taxable business profits: only profits attributable to the PE may be taxed in the other State.
Profits are taxable in the resident State unless an enterprise carries on business in the other State through a permanent establishment; then only profits attributable to the PE may be taxed there. Attribution follows the distinct-and-separate enterprise (arm's length) principle. Deductible expenses incurred for the PE are allowed, but payments from the PE to head office (other than reimbursements) for royalties, fees, commissions, management charges or, except for banks, interest, are not deductible nor are reciprocal charges taken into account. Customary apportionment, no attribution for mere purchases, and consistent year to year methods are permitted.
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