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CHAPTER I - Scope of the Arrangement
CHAPTER II - Definitions
CHAPTER III - Taxation of Income
CHAPTER IV - Avoidance of Double Taxation
CHAPTER V - Special Provisions
CHAPTER VI - 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 5

Permanent Establishment

(1) For the purposes of this Arrangement, 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 especially:

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

(3) A building site or construction or installation project constitutes a permanent establishment only if it lasts more than 183 days.

(4) Notwithstanding the provisions of paragraphs (1), (2) and (3), where an enterprise of a country performs services in the other country:

  • (a) through an individual who is present in that other country for a period or periods exceeding in the aggregate 183 days in any twelve-month period, or
  • (b) for a period or periods exceeding in the aggregate 183 days in any twelve-month period, and these services are performed for the same project or for connected projects through one or more individuals who are present and performing such services in that other country,

the activities carried on in that other country consisting of these services shall be deemed to be carried on through a permanent establishment of the enterprise situated in that other country unless these services are limited to those mentioned in paragraph 8 which, if performed through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph. For the purposes of this paragraph, services performed by an individual on behalf of one enterprise shall not be considered to be performed by another enterprise unless that other enterprise supervises, directs or controls the manner in which these services are performed by the individual.

(5) Notwithstanding the provisions of paragraphs (1), (2), (3) and (4), an enterprise of a country which carries on activities in the territorial sea, and any area beyond and adjacent to the territorial sea, of the other country within which that country exercises jurisdiction or sovereign rights as referred to in sub-paragraphs (b) and (c) of Article 3 of this Arrangement (offshore activities), shall be deemed to carry on, in respect of those activities, except as regards paragraph (2) of Article 14, business in that other country through a permanent establishment situated therein, unless the activities in question are carried on in the other country for a period or periods aggregating less than 30 days in any twelve-month period.

(6) For the purposes of paragraph (5), offshore activities shall be deemed not to include:

  • (a) one or any combination of the activities mentioned in paragraph (8);
  • (b) towing or anchor handling by ships primarily designed for that purpose and any other activities performed by such ships; and
  • (c) the transport of supplies or personnel by ships or aircraft in international traffic.

(7) Where an enterprise carrying on offshore activities in the other country is associated with another enterprise which continues, as part of the same project, the same offshore activities that are or were being carried on by the first-mentioned enterprise, and the aforementioned activities carried on by both enterprises in the aggregate constitute a period of at least 30 days, each enterprise shall, for the purposes of paragraph (5), be deemed to carry on its activities for a period of at least 30 days in any twelve-month period. An enterprise shall be regarded as associated with another enterprise if one enterprise holds directly or indirectly at least one third of the capital of the other enterprise or if a person holds directly or indirectly at least one third of the capital of both enterprises.

(8) Notwithstanding the preceding provisions, the term "permanent establishment" shall be deemed not to include:

  • (a) the use of facilities solely for the purpose of storage, 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 a preparatory or auxiliary character;
  • (f) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.

(9) Notwithstanding the provisions of paragraphs (1), (2), (3), (4) and (5), where a person-other than an agent of an independent status to whom paragraph (10) applies-is acting on behalf of an enterprise and has, and habitually exercises, in a country an authority to conclude contracts in the name of the enterprise, that enterprise shall be deemed to have a permanent establishment in that country in respect of any activities which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in paragraph (8) 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.

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

(11) The fact that a company which is a resident of a country controls or is controlled by a company which is a resident of the other country, or which carries on business in that other country, whether through a permanent establishment or otherwise, shall not of itself constitute either company a permanent establishment of the other.