ARTICLE 5

Permanent Establishment

(1) For the purposes of this Convention, the term “permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on.

(2) The term “permanent establishment” includes especially:

• (a) a place of management;
• (b) a branch;
• (c) an office;
• (d) a factory;
• (e) a workshop; and
• (f) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources.

(3) The term “permanent establishment” shall also include:

• (a) a building site, a construction or installation project or the supervisory activities in connection therewith, but only if such building site, project or activities last more than six months; and
• (b) the furnishing of services, including consultancy services, by an enterprise through employees or other individuals engaged by the enterprise for such purpose but only if activities of that nature continue within a Contracting State for a period or periods aggregating more than 183 days within any twelve-month period commencing or ending in the taxable year concerned.

The duration of activities under sub-paragraphs (a) and (b) shall be determined by aggregating the periods during which activities are carried on in a Contracting State by associated enterprises, provided that the activities of such an associated enterprise in that Contracting State are connected with the activities carried on in that Contracting State by its associated enterprises. The period during which two or more associated enterprises are carrying on concurrent activities shall be counted only once for the purpose of determining the duration of activities. An enterprise shall be deemed to be associated with another enterprise if one participates directly or indirectly in the management, control or capital of the other, or the same person or persons participate directly or indirectly in the management, control or capital of both enterprises.

(4) Notwithstanding the preceding provisions of this Article, the term “permanent establishment” shall be deemed not to include:

• (a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;
• (b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;
• (c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;
• (d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise;
• (e) the maintenance of a fixed place of business solely for the purpose of advertising, supplying information, carrying out scientific research or any other similar activity for the enterprise;

provided that such activity is of a preparatory or auxiliary character.

(5) Paragraph (4) shall not apply to a fixed place of business that is used or maintained by an enterprise if the same enterprise or a closely related enterprise carries on business activities at the same place or at another place in the same Contracting State and:

• (a) that place or other place constitutes a permanent establishment for the enterprise or the closely related enterprise under the provisions of this Article; or
• (b) the overall activity resulting from the combination of the activities carried on by the two enterprises at the same place, or by the same enterprise or the closely related enterprises at the two places, is not of a preparatory or auxiliary character,

provided that the business activities carried on by the two enterprises at the same place, or by the same enterprise or the closely related enterprises at the two places, constitute complementary functions that are part of a cohesive business operation.

(6) Notwithstanding the provisions of paragraphs (1) and (2) but subject to the provisions of paragraph (7), where a person is acting in a Contracting State on behalf of an enterprise and, in doing so, habitually concludes contracts, or habitually plays the principal role leading to the conclusion of contracts that are routinely concluded without material modification by the enterprise, and these contracts are:

• (a) in the name of the enterprise; or
• (b) for the transfer of the ownership of, or for the granting of the right to use, properly owned by that enterprise or that the enterprise has the right to use; or
• (c) for the provision of services by that enterprise,

that enterprise shall be deemed to have a permanent establishment in that Contracting State in respect of any activities which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in paragraph (4) which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph.

(7) Paragraph (6) shall not apply where the person acting in a Contracting State on behalf of an enterprise of the other Contracting State carries on business in the first-mentioned Contracting State as an independent agent and acts for the enterprise in the ordinary course of that business. Where, however, a person acts exclusively or almost exclusively on behalf of one or more enterprises to which it is closely related, that person shall not be considered to be an independent agent within the meaning of this paragraph with respect to any such enterprise.

(8) The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other Contracting State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.

(9) For the purposes of this Article, a person is closely related to an enterprise if, based on all the relevant facts and circumstances, one has control of the other or both are under the control of the same persons or enterprises. In any case, a person shall be considered to be closely related to an enterprise if one possesses directly or indirectly more than 50 per cent of the beneficial interest in the other (or, in the case of a company, more than 50 per cent of the aggregate vote and value of the company's shares or of the beneficial equity interest in the company) or if another person possesses directly or indirectly more than 50 per cent of the beneficial interest (or, in the case of a company, more than 50 per cent of the aggregate vote and value of the company's shares or of the beneficial equity interest in the company) in the person and the enterprise.

(10) Notwithstanding Article 7 and the provisions of this Article, premiums in respect of insurance policies issued by an enterprise of a Contracting State may be taxed in the other State in accordance with its domestic law.

However, except where the premium is attributable to a permanent establishment of the enterprise situated in that other Contracting State, the tax so charged shall not exceed:

• (a) 5 per cent of the gross amount of the premiums in the case of policies of reinsurance; and
• (b) 7 per cent of the gross amount of the premiums in the case of all other policies of insurance.