(1) The profits of an enterprise of a Contracting State shall be
taxable only in that State unless the enterprise carries on busi-
ness in the other Contracting State through a permanent estab-
lishment situated therein. If the enterprise carries on business as
aforesaid, the profits of the enterprise may be taxed in the other
State but only so much of them as is attributable to that perma-
nent establishment.
(2) Subject to the provisions of paragraph 3, where an enter-
prise of a Contracting State carries on business in the other
Contracting State through a permanent establishment situated
therein, there shall in each Contracting State be attributed to that
permanent establishment the profits which it might be expected
to make if it were a distinct and separate enterprise engaged in
the same or similar activities under the same or similar conditions
and dealing wholly independently with the enterprise of which it
is a permanent establishment or with other enterprises.
(3) In determining the profits of a permanent establishment,
there shall be allowed as deductions expenses of the enterprise,
being expenses which are incurred for the purposes of the
permanent establishment (including executive and general ad-
ministrative expenses so incurred), whether incurred in the State
in which the permanent establishment is situated or elsewhere.
(4) No profits shall be attributed to a permanent establishment
by reason of the mere purchase by that permanent establishment
of goods or merchandise for the enterprise.
(5) Where profits include items of income or gains which are
dealt with separately in other Articles of this Agreement, then
the provisions of those Articles shall not be affected by the
provisions of this Article.
(6) Notwithstanding the preceding provisions of this Article,
profits of an enterprise of a Contracting State from carrying on a
business of any form of insurance other than life insurance may
be taxed in the other Contracting State in accordance with the
law of that other State.
(7) Where:
a) a resident of the Federal Republic of Germany is beneficially
entitled, whether directly or through one or more interposed
trust estates, to a share of the business profits of an enter-
prise carried on in Australia by the trustee of a trust estate
other than a trust estate which is treated as a company for
tax purposes; and
b) in relation to that enterprise, that trustee would, in accor-
dance with the principles of Article 5, have a permanent
establishment in Australia,
the enterprise carried on by the trustee shall be deemed to be a
business carried on in Australia by that resident through a per-
manent establishment situated therein and that share of business
profits shall be attributed to that permanent establishment.
(8) A Contracting State shall make no adjustment to the profits
that are attributable to a permanent establishment of an enter-
prise of one of the Contracting States after the expiration of
10 years from the end of the taxable year in which the profits
would have been attributable to the permanent establishment.
The provisions of this paragraph shall not apply in the case of
fraud, wilful default or, in the case of Australia, gross negligence,
or, in the case of the Federal Republic of Germany, negligence,
or where, within that period of 10 years, an audit into the profits
of the enterprise has been initiated by either State.