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Note: This Treaty may be impacted by the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI). MLI impact on Tax Treaties is available with the Orbitax International Tax Research & Compliance Expert.

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 in particular:

  • (a) a place of management;
  • (b) a branch;
  • (c) an office;
  • (d) a factory;
  • (e) a manufacturing unit;
  • (f) a workshop;
  • (g) a mine, an oil or gas well, a quarry or any other place relating to the extraction of natural resources;
  • (h) an agricultural farm or a field;

(3) The term "permanent establishment" also includes:

  • (a) a construction or assembly site or a site for supervisory activities carried out therein, but only where the activities of this site, this institution or these activities last for more than nine months;
  • (b) the rendering of services, including consultancy services by a State owned enterprise of a Contracting State acting through employees or other personnel in the other Contracting State, provided that such activities of the same enterprise or affiliated enterprises continue for a period or periods exceeding in the aggregate, nine months;

(4) Notwithstanding the provisions of Articles 1 and 3 of the Convention, the term "permanent establishment" shall be deemed not to include the following:

  • (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 carrying on, for the enterprise, any other activity of a preparatory or auxiliary nature;
  • (f) the maintenance of a fixed place of business solely for the purpose of carrying on any combination of activities mentioned in sub-paragraphs (a) through (e) of this paragraph, provided that the overall activity of the fixed place of business resulting from this combination remains of a preparatory or auxiliary nature.
  • (g) the sale of goods or merchandise belonging to the enterprise displayed in a seasonal fair or exhibition and after the closing of the said exhibition; provided that the concerned parties or companies fulfill all requirements in either Contracting State.

(5) Notwithstanding the provisions of paragraphs (1) and (2) of this Article, where a person, other than an agent of an independent status to whom paragraph (2) of this Article applies, is acting in a Contracting State on behalf of an enterprise of the other Contracting State, such enterprise shall be deemed to be a permanent establishment in the first-mentioned State if:

  • (a) the said person has in that State a general authority to conclude contracts for or on behalf of such enterprise, or
  • (b) the said person maintains in that State a stock of goods and merchandise from which he regularly sells goods or merchandise for or on behalf of such enterprise;
  • (c) if the activities of such person are not limited to those mentioned in paragraph (4) of this Article and 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.

(6) An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business, except when the activities of such an agent are devoted wholly to the business of that enterprise, then, such an agent shall not be considered an agent of an independent status within the meaning of this paragraph.

(7) 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 State (whether through a permanent establishment or otherwise), shall not of itself suffice to constitute either company a permanent establishment of the other.

(8) Notwithstanding the provisions of paragraph (3) of Article 12, profits from studies of planning and activities of a business, from design and research, as well as technical services carried out by a resident of one of the Contracting States, within the scope of a construction or assembly project, carried out in the other Contracting State shall not be attached/linked to this project of construction and assembly, as long as these activities are carried out outside the other Contracting State and provided that the expenses pertaining to it are not taken into account in determining the net result/income liable to tax.