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HMRC internal manual

Double Taxation Relief Manual

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HM Revenue & Customs
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DT: Romania: double taxation agreement, Article 5: Permanent Establishment

(1) For the purposes of this Convention, the term `permanent establishment` means afixed place of business in which the business of the enterprise is wholly or partlycarried on.

(2) The term `permanent establishment` shall include especially:

(a) a place of management;

(b) a branch;

(c) an office;

(d) a factory;

(e) a workshop;

(f) a mine, oil well, quarry or other place of extraction of natural resources;

(g) an installation or structure used for the exploration of natural resources;

(h) a building site or construction or assembly project which exists for more than twelve months.

(3) The term `permanent establishment` shall not be deemed to include:

(a) the use of facilities solely for the purpose of storage, display or delivery pursuant to a sales contract, 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 for collecting information, for the enterprise;

(e) the maintenance of a fixed place of business solely for the purpose of advertising, for the supply of information, for scientific research or for similar activities which have a preparatory or auxiliary character, for the enterprise.

(4) An enterprise of a Contracting State shall be deemed to have a permanentestablishment in the other Contracting State if it carries on the activity of providingthe services within that other Contracting State of artistes or athletes referred to inArticle 18.

(5) A person acting in a Contracting State on behalf of an enterprise of the otherContracting State - other than an agent of an independent status to whom the provisions ofparagraph (6) of this Article apply - shall be deemed to be a permanent establishment inthe first-mentioned State if he has, and habitually exercises in that State, an authorityto conclude contracts in the name of the enterprise unless his activities are limited tothe purchase of goods or merchandise for the enterprise.

(6) An enterprise of a Contracting State shall not be deemed to have a permanentestablishment in the other Contracting State merely because it carries on business in thatother State through a broker, general commission agent or any other agent of anindependent status, where such persons are acting in the ordinary course of theirbusiness.

(7) The fact that a company which is a resident of a Contracting State controls or iscontrolled by a company which is a resident of the other Contracting State, or whichcarries on business in that other State (whether through a permanent establishment orotherwise), shall not of itself constitute either company a permanent establishment of theother.