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CHAPTER 1 - General Provisions
CHAPTER 2 - Taxation of Income
CHAPTER 3 - Inheritance Tax
CHAPTER 4 - Registration Fees Other than Inheritance Tax-Stamp Duty
CHAPTER 5 - Administrative Assistance
CHAPTER 6 - Special Provisions
CHAPTER 7 - Transitional Provisions
CHAPTER 8 - Final Provisions
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 8

Profits of Enterprises

(1) The profits of an enterprise of a Member State shall be taxable only in that State unless the enterprise carries on business in another Member State through a permanent establishment situated therein . If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in that other State but only to the extent that they are attributable to:

  • (a) the said permanent establishment;
  • (b) sales in that other State of goods of the same kind or of a similar nature as those sold through that permanent establishment;
  • (c) other business activities of the same kind as those carried on through that permanent establishment, or activities of a similar nature, carried on in that other State

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

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

No deduction shall be permitted, however, for sums which would otherwise be paid by the permanent establishment to the headquarters of the enterprise or to any one of its establishments as royalties, fees or other similar payments for the use of operating licenses, patents or other rights or as a commission other than the reimbursement of actual expenses carried out, for services rendered or for a management activity or, except in the case of a banking enterprise, as interest on sums loaned to the permanent establishment.

In addition, in calculating the profits of a permanent establishment, any sums  which are charged by the permanent establishment to the headquarters of the enterprise or any of its establishments as royalties, fees or other similar payments for the use of operating licenses, patents or other rights or as commission, other than the reimbursement of actual expenses carried out, for services rendered or for a management activity or, except in the case of a banking enterprise, as interest on sums loaned to the headquarters of the enterprise or any of its establishments, shall not be included.

(4) Insofar as it has been customary in a Member State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits   of the enterprise to its various parts, no provision contained in paragraph (2) of this article shall preclude that Member State from determining the profits to be taxed by such an apportionment  as may be customary; the method of apportionment adopted, however, shall be such that the result shall be in accordance with the principles contained in this Article.

(5) For the purposes of the preceding paragraphs of this Article, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to proceed otherwise.

(6) Where profits include items of income which are dealt with separately in other Articles of this Regulation, then the provisions of those Articles shall not be affected by the provisions of this Article.