Permanent establishment taxation: profits attributable to a local PE may be taxed where the PE operates, using arm's length attribution. Profits of a resident enterprise are taxable only in that State except profits attributable to a permanent establishment in the other Contracting State, which may be taxed there. Attributable profits are determined by treating the permanent establishment as a distinct and separate enterprise dealing independently, using a consistent method year to year unless justified otherwise; if correct attribution cannot be determined, profits may be estimated reasonably. Reasonable business expenses, including executive and general administrative expenses, are deductible, and mere purchase of goods does not create attributable profits. Other treaty provisions for specific income items prevail.
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: profits attributable to a local PE may be taxed where the PE operates, using arm's length attribution.
Profits of a resident enterprise are taxable only in that State except profits attributable to a permanent establishment in the other Contracting State, which may be taxed there. Attributable profits are determined by treating the permanent establishment as a distinct and separate enterprise dealing independently, using a consistent method year to year unless justified otherwise; if correct attribution cannot be determined, profits may be estimated reasonably. Reasonable business expenses, including executive and general administrative expenses, are deductible, and mere purchase of goods does not create attributable profits. Other treaty provisions for specific income items prevail.
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