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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" shall mean the fixed place of business through which the business of an enterprise is wholly or in partly carried on.

(2) The term "permanent establishment" shall include, in particular:

  • (a) a place of management;
  • (b) a branch;
  • (c) an office;
  • (d) a factory;
  • (e) a workshop;
  • (f) an atelier
  • (g) a mine, an oil or gas well, a quarry or any other area used to extract natural resources.

(3) The term "permanent establishment" shall include:

  • (a) a building, installation or construction site, or related supervisory activities if such site, enterprise or activities would last for not more than 18 months;
  • (b) The rendering of services including consultancy services provided by an enterprise of a Contracting State through employees or other personnel in the other Contracting State, provided that such activities continue for the same enterprise or connected enterprise for a period or periods not exceeding in the aggregate 12 months.

(4) Notwithstanding the provisions of paragraphs (1) and (3) of this Article hereof, the term "permanent establishment" shall not 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 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 activities of a preparatory or auxiliary nature;
  • (f) the maintenance of a fixed place of business solely for the purpose of carrying on any activities mentioned in sub-paragraphs (a) to (e) hereof, provided that the activities of the fixed place shall have preparatory or auxiliary nature;
  • (g) Selling goods or any other kind of trade carried out by the enterprise that is participating in seasonal exhibitions after the date of the exhibition, provided that the competent authorities or the enterprise shall meet all requirements of either Contracting States.

(5) Notwithstanding the provisions included in paragraphs (1) and (2) of this Article, where a person - other than an agent of independent status to whom provisions of paragraph (7) apply - is operating in a Contracting State on behalf of a representative of an enterprise in the other Contracting State, this enterprise shall be considered to have a permanent establishment in the first mentioned Contracting State if:

  • (a) this person practices in such State the authority to sign contracts on behalf of the enterprise;
  • (b) this person is regularly selling goods in such State on behalf of the enterprise.

(6) The activities carried out by this person are limited to the activities included in paragraph (4). Such activities, if carried out through a fixed place of business, shall prevent the head office of the enterprise from becoming a permanent establishment in accordance with the provisions of such paragraph.

(7) An enterprise in a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, a general commission agent, or any other agent of independent status - provided that such broker or agent is acting in the ordinary course of their business - unless all activities of such broker are dedicated for this enterprise, other than those that may not be considered independent by virtue of this paragraph.

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

(9) Notwithstanding the provisions of Articles 3 and 12, the gains derived from planning, enterprise works, designing and technical services provided by a resident of a Contracting State to a construction or installation site located at the other Contacting State may not be taken into account when identifying the net capital subject to tax, as such activities are carried out outside the other Contracting State and have no relation to the construction or installation site.