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Cape Verde - Sao Tome Tax Treaty (2019, not yet in force) — Orbitax Tax Hub

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.

(2) The term "permanent establishment" includes specially:

  • (a) a place of management;
  • (b) a branch;
  • (c) an office;
  • (d) a factory;
  • (e) a workshop; and
  • (f) a mine, oil or gas well, a quarry or any other place of extraction of natural resource.

(3) A building site, a construction, assembly or installation project in connection therewith constitutes a permanent establishment if it lasts more than six months.

(4) The furnishing of services, including consultancy services by an enterprise through employees or other personnel in the territory of a Contracting state, shall only constitute a permanent establishment of that enterprise in that Contracting State when such activities continue in that Contracting State for more than 183 days within any 12-months period.

(5) 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 or delivery 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, display or delivery;
  • (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 the purpose of carrying on, for the enterprise, any other activity of preparatory or auxiliary nature;
  • (f) the maintenance of a fixed place of business solely for any combination of the activities mentioned in sub-paragraphs (a) to (e), provided that such activity of the fixed place of business, resulting from the combination of these activities, is of a preparatory or auxiliary nature.

(6) Paragraph (5) shall not apply to a fixed place of business that is used or maintained by an enterprise if the same enterprise or a closely related enterprise carries on business activities at the same place or at another place in the same Contracting State and:

  • (a) that place or other place constitutes a permanent establishment for the closely related enterprise under the provisions of this Article;
  • (b) the overall activity resulting from the combination of the activities carried on by two enterprises at the same place, or by the same enterprise or closely related enterprises at the two places, is not of a preparatory or auxiliary nature;
  • (c) provided that the business activities carried on by the two enterprises at the same place, or by the same enterprise or closely related enterprises at the two places, constitute complementary functions that are part of a cohesive business operation.

(7) Notwithstanding the provisions of paragraphs (1) and (2), where a person-other than an independent agent-to whom paragraph (8) applies-is acting on behalf of an enterprise and has, and habitually exercises, in a Contracting State an authority to conclude contracts in the name of the enterprise, or habitually plays the principal role leading to the conclusion of contracts that are routinely concluded without material modification by the enterprise, and these contracts are:

  • (a) in the name of the enterprise, or
  • (b) for the transfer of ownership of, or for the granting of the right to use, property owned by that enterprise or that the enterprise has the right to use, or
  • (c) for the provision of the services by that enterprise, that enterprise shall be deemed to have a permanent establishment in that State in respect of any activities which that person undertakes for the enterprise, unless the activities of that person are limited to those referred to in paragraph (5), which, if exercised through a fixed place, would not make this fixed place a permanent establishment under the provisions of that paragraph.

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

(9) 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.

(10) For the purposes of this Article, a person or enterprise is closely related to an enterprise if, based on all the relevant facts and circumstances, one has control of the other or both are under the control of the same person or enterprise. In any case, a person or enterprise shall be considered to be closely related to an enterprise if one possesses directly or indirectly more than 50 percent of the beneficial interest in the other enterprise.