Permanent establishment determines taxation of business profits, allowing host-state tax only on profits attributable to that PE. An enterprise of a Contracting State is taxable in the other State only if it carries on business there through a permanent establishment, and then only for profits attributable to that PE, including sales of similar goods and similar business activities. Profits must be attributed as if the PE were a distinct and separate enterprise operating under similar conditions, with allowable deductions for PE expenses. Customary apportionment methods may be used if they align with the Article's principles, purchases alone do not create attributable profits, and the method of attribution should be used consistently year to 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.
Permanent establishment determines taxation of business profits, allowing host-state tax only on profits attributable to that PE.
An enterprise of a Contracting State is taxable in the other State only if it carries on business there through a permanent establishment, and then only for profits attributable to that PE, including sales of similar goods and similar business activities. Profits must be attributed as if the PE were a distinct and separate enterprise operating under similar conditions, with allowable deductions for PE expenses. Customary apportionment methods may be used if they align with the Article's principles, purchases alone do not create attributable profits, and the method of attribution should be used consistently year to year.
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