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HMRC internal manual

Double Taxation Relief Manual

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HM Revenue & Customs
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Isle of Man: double taxation agreement, Article 9A: Offshore activities

(1) The provisions of this paragraph shall apply notwithstanding the preceding provisions of this Arrangement.

(2) In this paragraph, `relevant activities` means activities which are carried on offshore in connection with the exploration or exploitation of the sea-bed and sub-soil and their natural resources situated in one of the territories.

(3) An enterprise of one of the territories which carries on relevant activities in the other territory shall in respect of those activities, subject to sub-paragraphs (4) to (7) of this paragraph, be deemed to be carrying on business in that other territory through a permanent establishment situated therein.

(4) Relevant activities which are carried on by an enterprise of one of the territories in the other territory for a period or periods not exceeding in the aggregate 30 days in any period of 12 months shall not constitute the carrying on of business through a permanent establishment situated therein.

(5) For the purposes of sub-paragraph (4) of this paragraph, where an enterprise of one of the territories carrying on relevant activities in the other territory is associated with another enterprise carrying on substantially similar relevant activities there, the former enterprise shall be deemed to be carrying on all such activities of the latter enterprise, except to the extent that those activities are carried on at the same time as its own activities.

(6) For the purposes of sub-paragraph (5) of this paragraph, an enterprise shall be regarded as associated with another enterprise if -

(a) one participates directly or indirectly in the management, control or capital of the other; or

(b) the same persons participate directly or indirectly in the management, control or capital of both enterprises.

(7) Profits derived by an enterprise of one of the territories from -

(a) the transportation of supplies from a port in that territory by a ship or aircraft to a location or locations in the other territory where relevant activities are being carried on; or

(b) the operation of tug boats registered in and normally operating from a port in that territory in connection with such activities,

shall be taxable only in that territory.

(8) A resident of one of the territories who carries on relevant activities in the other territory, which consist of professional services or other activities of an independent character, shall be deemed to be performing those activities from a fixed base in that other territory, but income derived by a resident of one of the territories in respect of such activities performed in the other territory shall not be taxable in that other territory if the activities are performed in the other territory for a period or periods not exceeding in the aggregated 30 days in any period of 12 months.

(9) Subject to sub-paragraph (10) of this paragraph, salaries, wages and similar remuneration derived by a resident of one of the territories in respect of an employment connected with relevant activities in the other territory may, to the extent that the duties are performed offshore in that other territory, be taxed in that other territory.

(10) Salaries, wages and similar remuneration derived by a resident of one of the territories in respect of an employment exercised aboard a ship, aircraft or tug boat undertaking operations referred to in sub-paragraph (7) of this paragraph shall be taxable only in the territory of which the employee is a resident.