background image
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.


Business Profits

(1) The profits of an enterprise of a Contracting State shall be taxable only in that State, unless the enterprise carries on its business in the other Contracting State through a permanent establishment situated therein. If an enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State, but only so much of them as are attributable to that permanent establishment.

(2) Subject to the provisions of paragraph (3), when an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment that is situated therein, there shall, in each Contracting State, be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise that was engaged in the same or similar activities under the same or similar conditions and if it were wholly independent in dealing with the enterprise of which it is a permanent establishment.

(3) For determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment including executive and general administrative expenses so incurred, either in the State in which the permanent establishment is situated or elsewhere.

(4) Insofar as it is customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of a division of the total profits of the enterprise between its various parts, no provision of paragraph (2) shall preclude that Contracting State from determining the profits to be taxed in such a manner; the method of apportionment adopted should, however, be such that the obtained result is in conformity with the principles contained in the present Article.

(5) No profits shall be attributed to a permanent establishment for the mere purchase by that permanent establishment of merchandise for the enterprise.

(6) For the purposes of the preceding paragraphs, the profits to be attributed to a permanent establishment shall be determined every year by the same method, unless there are good and sufficient reasons to proceed differently.

(7) This Article also applies to income from participation in a partnership. It also extends to compensation that a partner of a partnership receives from the partnership for his activity in the service of the partnership, for the granting of loans or for transferring assets, provided these compensations are added, according to the tax laws of the Contracting State in which this permanent establishment is located, to the income of the partner arising from out of this permanent establishment.

(8) When the profits include the items of income dealt with separately in other Articles of this Convention, the provisions of those Articles shall not be affected by the provisions of this Article.