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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 in a Contracting State.

(2) The term "permanent establishment" includes, in particular, the following:

  • (a) a place of effective management;
  • (b) a branch;
  • (c) an office;
  • (d) a factory;
  • (e) a company;
  • (f) a farm or plantation;
  • (g) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources;

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

  • (a) a construction work or project, assembly or installation, or supervision activities related to them, but only when the duration of that work, project or activities exceeds six months;
  • (b) the rendering of services, including consultancy services, by an enterprise through employees or other personnel employed by the enterprise for such purpose (for the same project or a connected project), but only if such activities continue for a period of three months in any twelve-month period.

(4) Notwithstanding the preceding provisions of this Article the term "permanent establishment" shall be deemed not to include the following:

  • (a) the use of facilities solely for the purpose of storage or to display merchandise belonging to the enterprise;
  • (b) the maintenance of a stock of merchandise belonging to the enterprise solely for the purpose of storage or display;
  • (c) the maintenance of a stock of 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 merchandise or for 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 activity of a preparatory or auxiliary nature;
  • (f) the maintenance of a fixed place of business solely for the purpose of advertising, supplying information, for carrying out scientific research, or for exercising other similar activities of a preparatory or auxiliary nature for the enterprise;
  • (g) the maintenance of a fixed place of business solely for the purpose of carrying  out any combination of activities mentioned in paragraphs (a) through (f), provided that the overall activities of the fixed place of business resulting from this combination is of a preparatory or auxiliary nature.

(5) Notwithstanding the provisions of paragraphs (1) and (2) of this Article, where a person, other than an agent of independent status, to whom the provisions of paragraph (6) of this Article applies, act in a Contracting State on behalf of an enterprise of another Contracting State, then that enterprise shall be deemed to have a permanent establishment in that first Contracting State in respect of any activities which that person undertakes for the enterprise if that person:

  • (a) has and habitually exercises in that State the authority to enter into a contract on behalf of the enterprise, unless the activities of such person be limited to those mentioned in paragraph (4) of this Article 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; or
  • (b) has no such authority, but habitually maintains in the first-mentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise.

(6) An enterprise of a Contracting State shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on its activities in that State through a broker, a general commission agent, or any other agent of independent status, provided that such persons are acting in the ordinary course of their business. However, where the activities of such agent is exercised exclusively or almost exclusively on behalf of that enterprise, and between that agent and that enterprise they have itself agreed or tax, in its trade and financial relations, different conditions from the ones that would have itself agreed among independent enterprises, then such agent shall not be deemed to have independent status under the provision 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 Contacting state or which carries on business in that other State (whether through permanent establishment or otherwise) shall not of itself be sufficient to constitute either company a permanent establishment of the other.