(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
permanent 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.
(3) In determining the profits of a permanent establishment,
there shall be allowed as deductions expenses which are
incurred for the purposes of the permanent establishment,
including executive and general administrative expenses so
incurred, whether in the State in which the permanent establish-
ment is situated or elsewhere. However, no such deduction
shall be allowed in respect of amounts, if any, paid (otherwise
than towards reimbursement of actual expenses) by the per-
manent establishment to the head office of the enterprise or any
of its offices, by way of royalties, fees or other similar payments
in return for the use of patents or other rights, or by way of com-
mission, for specific services performed or for management, or,
except in the case of banking enterprise, by way of interest on
moneys lent to the permanent establishment. Likewise, no
account shall be taken, in the determination of the profits of a
permanent establishment, for amounts charged (otherwise than
towards reimbursement of actual expenses), by the permanent
establishment to the head office of the enterprise or any of its
other offices, by way of royalties, fees or other similar payments
in return for the use of patents or other rights, or by way of com-
mission for specific services performed or for management, or,
except in the case of a banking enterprise by way of interest on
moneys lent to the head office of the enterprise or any of its
other offices.
(4) Insofar as it has been customary in a Contracting State to
determine the profits to be attributed to a permanent establish-
ment on the basis of an apportionment of the total profits of the
enterprise to its various parts, nothing in paragraph 2 shall pre-
clude that Contracting State from determining the profits to be
taxed by such an apportionment as may be customary; the
method of apportionment adopted shall, however, be such that
the result shall be in accordance with the principles contained in
this Article.
(5) No profits shall be attributed to a permanent establish-
ment by reason of the mere purchase by that permanent estab-
lishment of goods or merchandise for the enterprise.
(6) For the purposes of the preceding paragraphs of this Ar-
ticle, the profits to be attributed to the permanent establishment
shall be determined by the same method year by year unless
there is good and sufficient reason to the contrary.
(7) This Article shall also apply to income from participation
in a partnership. It shall further apply to remuneration received
by a partner from the partnership for activities in the service of
the partnership and for the granting of loans or the provisions of
assets, where such remuneration is attributable under the tax
law of the Contracting State in which the permanent establish-
ment is situated to the income derived by a partner from that
permanent establishment.
(8) Where profits include items of income which are dealt
with separately in other Articles of this Agreement, then the pro-
visions of those Articles shall not be affected by the provisions
of this Article.