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HMRC internal manual

Double Taxation Relief Manual

From
HM Revenue & Customs
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DT: Soviet Union: double taxation agreement, Article 5: Permanent Establishment

(1) For the purposes of this Convention, the term `permanent establishment` means any branch, office, agency or other fixed place of business situated in a Contracting State in accordance with the law of that State through which a resident of the other Contracting State wholly or partly carries on any commercial activity.
(2) Notwithstanding the provisions of paragraph (1) of this Article a permanent establishment in a Contracting State through which a resident of the other Contracting State wholly or partly carries on any commercial activity shall not include:
(a) a building site, construction or assembly project, providing it lasts for not more than 24 months;
(b) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the resident;
(c) the use of facilities for the display of goods or merchandise by the resident at exhibitions and for the subsequent sale of those goods or merchandise;
(d) the maintenance of a stock of goods or merchandise belonging to the resident solely for the purpose of storage, display or delivery;
(e) the maintenance of a stock of goods or merchandise belonging to the resident solely for the purpose of processing by another person;
(f) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or of collecting and disseminating information, for the resident;
(g) the maintenance of a fixed place of business solely for the purpose of carrying on, for the resident, advertising, marketing or any other activity of a preparatory or auxiliary character;
(h) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (a) to (g) inclusive, provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character for the resident.
(3) Notwithstanding the provisions of paragraph (1) of this Article, where a resident of a Contracting State carries on commercial activities in the other Contracting State through an agent who:
(a) is not an agent of an independent status to whom paragraph (4) of this Article applies;
(b) acts in the interest and on behalf of that resident; and
(c) has and habitually exercises an authority to conclude contracts in the name of that resident;
that resident shall be deemed to have a permanent establishment in the other State unless the agent carries on for the resident those commercial activities mentioned in paragraph (2) of this Article and the activities if exercised through a fixed place of business would not make that fixed place of business a permanent establishment under the provisions of that paragraph.
(4) A resident of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State if that resident carries on business in that other State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business.
(5) The fact that a person (other than an individual) which is a resident of a Contracting State controls or is controlled by a person (other than an individual) which is a resident of the other Contracting State or carries on business in that other State (whether through a permanent establishment or otherwise) shall not of itself constitute either person a permanent establishment of the other.