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 Agreement, the term "permanent establishment" means a fixed place of business through which the business of an enterprise of a Contracting State is wholly or partly carried on in the other Contracting State.

(2) The term "permanent establishment" shall include especially:

  • (a) a place of management;
  • (b) a branch;
  • (c) an office;
  • (d) a factory;
  • (e) a workshop;
  • (f) a warehouse or premises used as sales outlet;
  • (g) a farm or plantation;
  • (h) a mine, an oil or gas well, a quarry or any other place of extraction or exploration or exploitation of natural resources, including timber or other forest produce, drilling rig or working ship.

(3) The term "permanent establishment" likewise encompasses:

  • (a) a building site, or construction, assembly or installation project or supervisory activities in connection therewith, but only where such site, project or activities continue for a period of more than six months;
  • (b) the furnishing of services, including consultancy services by an enterprise through employees or other personnel engaged by the enterprise for such purpose, but only where activities of that nature continue (for the same or a connected project) within the country for a period or periods aggregating more than 91 days within any 12 month period.

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

  • (a) the use of facilities solely for the purpose of storage or display of goods or merchandise belonging to the enterprise;
  • (b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display;
  • (c) the maintenance of a stock of goods or 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 goods or merchandise or of collecting information, for the enterprise;
  • (e) the maintenance of a fixed place of business solely for scientific research or for similar activities which have a preparatory or auxiliary character, for the enterprise;
  • (f) the maintenance of a fixed place of business solely for the purpose of advertising, or for the supply of information.

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

  • (a) has or habitually exercises in that State an authority to conclude contracts in the name of the enterprise, unless the activities of such person are limited to those mentioned in paragraph (4) which, if exercised through a 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 on behalf of the enterprise; or
  • (c) manufactures or processes in that State for the enterprise goods or merchandise belonging to the enterprise.

(6) An insurance enterprise of one of the two States shall, except with regard to re-insurance, be deemed to have a permanent establishment in the other State if it collects premiums in the territory of that other State or insures risks situated therein through an employee or through a representative who is not an agent of an independent status within the meaning of paragraph (7).

(7) An enterprise of one of the two States shall not be deemed to have a permanent establishment in the other State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status, where such persons are acting in the ordinary course of their business. However, when such a broker or agent carries on activities wholly or almost wholly for that enterprise itself or for that enterprise and other enterprises which are controlled by or have a controlling interest in it, he shall not be considered an agent of an independent status within the meaning of this paragraph.

(8) 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 in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.