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.

ARTICLE 5

Permanent Establishment

(1) For the purposes of this Convention, the term "permanent establishment" refers to a fixed place of business through which the business of an enterprise is wholly or partly carried on.

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

  • (a) a place of management;
  • (b) a branch;
  • (c) an office;
  • (d) a factory;
  • (e) a sales outlet;
  • (f) a workshop;
  • (g) a mine, quarry or any other place of extraction of natural resources;
  • (h) a building site, or a site for temporary assembly operations or for supervisory activities in connection therewith, where such site, temporary assembly operations or activities last for more than three months or where the assembly operations or supervisory activities following the sale of machinery or equipment have a duration of less than three months and the cost of assembly or supervision exceeds 10 percent of the price of these machines or equipment.

(3) The term permanent establishment, however, shall be deemed not to include the following:

  • (a) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;
  • (b) the use of a fixed place of business by the enterprise, solely for the purpose of supplying information, of scientific research or for similar activities of a preparatory nature;
  • (c) the use of a fixed place of business for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;
  • (d) the maintenance of a warehouse belonging to the enterprise, for the purpose of storage, display and delivery;
  • (e) the use of a fixed place of business solely for the purpose of advertising.

(4) A person acting in a Contracting State on behalf of an enterprise of the other Contracting State, other than an agent of independent status as defined in paragraph (6) of this Article, shall be deemed to have a "permanent establishment" in the first-mentioned State provided he or she has, and habitually exercises, in that Contracting State an authority to enter into contracts on behalf of the enterprise.

In particular, an agent who habitually has, at his or her disposal, in the first-mentioned State, a stock of goods or merchandise belonging to the enterprise, through which he or she regularly executes orders derived on behalf of the enterprise, shall be deemed to be vested with such an authority.

(5) An insurance agency in one of the Contracting States shall be deemed to have a permanent establishment in the other Contracting State from the time it receives premiums on the territory of the said State or insures risks covered in such a territory, through a representative who does not enter under the category of persons covered under paragraph (6) of this Article.

(6) An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on commercial operations through a broker, a general commission agent or any other intermediary agent of independent status, provided that such persons are acting in the ordinary course of their business.

However, if the agent or middleman, "whose help is sought", has available to him or her, a stock of merchandise in consignment from where sales and delivery are carried out, then such stock shall be deemed to be considered as being characteristic of the existence of a permanent establishment of the enterprise.

(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 Contracting State or which carries on business therein, whether through a permanent establishment or otherwise, shall not of itself be sufficient to constitute either company a permanent establishment of the other.