(1) Where an enterprise of one of the Contracting States has a fixed place of business wholly or partially in the part of a cross-border economic area belonging to the territory of the other Contracting State and the first-mentioned State has the right to tax the profits of this enterprise or the income from employment of employees working on behalf of this enterprise, the first-mentioned State may to this extent independently conduct external audits for the purpose of determining the tax circumstances in this fixed place of business. The other State shall be entitled to participate in the audit.

(2) The Contracting State on whose territory an external audit under paragraph (1) is foreseen shall be informed of this by the other Contracting State at least two weeks before the planned start of the audit. The notification shall indicate:

• (a) the authority or agency which initiated the notification submitted by the highest tax authority;
• (b) the authority or agency which is charged with the external audit;
• (c) the name, address and any other particulars assisting in the identification of the enterprise to be audited;
• (d) the planned start of the external audit;
• (e) which types of taxes and periods the external audit covers.

Following the conclusion of the external audit, the Contracting State conducting the external audit shall inform the other State of the date of the termination of the audit.

(3) The legal and procedural provisions of the Contracting State conducting the audit shall apply to the external audit under paragraph (1). Objections to measures taken by the Contracting State conducting the audit shall be brought only before the appropriate body of that State.

(4) The third party data of which the Contracting State conducting the external audit gains knowledge through such audit may be used by this State only after they have been supplied to the other Contracting State which processes and uses this data under its legal provisions and then makes them available to the Contracting State conducting the external audit and authorises this Contracting State to use this data.

(5) Paragraph (1) shall not apply if the Contracting State on whose territory an external audit is foreseen objects to the conducting of the external audit. The objection shall only be permissible if the latter State considers the external audit contrary to the public policy (ordre public) or the essential interests of the State. In such case, both Contracting States shall conduct a joint external audit at the relevant enterprise within one month of the declaration of the objection. The legal and procedural provisions of the State on whose territory the joint audit takes place shall be authoritative in the process.