immovable property, either of which, under the taxation law of the Contracting State in

which the property is situated, is assimilated to income from immovable property.

ARTICLE 7

BUSINESS PROFITS

1. The profits of an enterprise of a Contracting State shall be taxable only in that

State unless the enterprise carries on business in the other Contracting State through a

permanent establishment situated therein. If the enterprise carries on business as afore-

said, 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 enterprise of a Contracting

State carries on business in the other Contracting State through a permanent establish-

ment situated therein, there shall in each Contracting State be attributed to that perma-

nent 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 simi-

lar 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 establish-

ment, including executive and general administrative expenses so incurred, whether in

the State in which the permanent establishment is situated or elsewhere.

4. Insofar as it has been customary in a Contracting State to determine the profits to

be attributed to a permanent establishment on the basis of an apportionment of the total

profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude 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 establishment by reason of the mere

purchase by that permanent establishment of goods or merchandise for the enterprise.

6. For the purposes of the preceding paragraphs, 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. Where profits include items of income which are dealt with separately in other

Articles of this Convention, then the provisions of those Articles shall not be affected by

the provisions of this Article.

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