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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.

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

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

(3) A building site, construction, installation or assembly project, or supervisory activities related to such site or project, shall be considered as a permanent establishment only if such site, project or related activities continue for a period of more than six months.

(4) The rendering of services, including consultancy services by an enterprise through employees or other personnel engaged by the enterprise for such purpose, shall be considered as a permanent establishment only if such activities continue for a period or periods, exceeding in the aggregate six months in any twelve month 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, display or delivery of goods or merchandise belonging to the enterprise, or the maintenance of a stock of such goods or merchandise only for the purpose of display;
  • (b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;
  • (c) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or of collecting information for the enterprise;
  • (d) the maintenance of a fixed place for the purpose of providing information, conducting studies or similar activities of a preparatory or auxiliary nature 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 nature;
  • (f) the maintenance of a fixed place of business solely for the purpose of carrying on any combination of activities mentioned in sub-paragraphs (a) through (e), provided that the overall activity of the fixed place of business resulting from this combination of activities is of a preparatory or auxiliary nature.

(6) Notwithstanding the provisions of paragraphs (1) and (2) of this Article, where a person-other than an agent of independent status to whom paragraph (7) applies-acts on behalf of an enterprise in the other Contracting State, then that enterprise shall be deemed to have a permanent establishment in that first-mentioned State in respect of any activities which that person undertakes for the enterprise, if:

  • (a) such person has and habitually exercises in the first-mentioned State the authority to conclude contracts on behalf of the enterprise, provided that such activities of such person are limited to those mentioned in paragraph (5) 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) such person usually maintains in the first-mentioned State a stock of goods or merchandise belonging to the enterprise for the purpose of delivering goods or merchandise regularly on behalf of the enterprise; or
  • (c) such person regularly places orders in the first-mentioned Contracting State for that enterprise or for other similar enterprises that are supervised or authorized by the first-mentioned enterprise; or
  • (d) such person, as required by his work in a Contracting State, manufactures goods or merchandise on behalf of the enterprise.

(7) An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, a general commission agent or any other agent of independent status, provided that such persons act in the ordinary course of their business. For the purposes of this paragraph, if such agent carries on his activities wholly or partly on behalf of the enterprise, then such agent shall not be deemed to be an agent of independent status.

(8) Notwithstanding the provisions of this Article, an insurance enterprise of a Contracting State, except in the case of re-insurance, shall be deemed to have a permanent establishment in the other Contracting State, if it collects premiums or insures risk in that other State through a person other than an agent of independent status as defined in paragraph (7) of this Article.

(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 be sufficient to constitute either company a permanent establishment of the other.