PART IV.

AVOIDANCE OF PERMANENT ESTABLISHMENT STATUS

Article 12 – Artificial Avoidance of Permanent Establishment Status through Commissionnaire Arrangements and Similar Strategies

1. Notwithstanding the provisions of a Covered Tax Agreement that define the term “permanent establishment”, but subject to paragraph 2, where a person is acting in a Contracting Jurisdiction to a Covered Tax Agreement on behalf of an enterprise and, in doing so, habitually concludes contracts, or habitually

plays the principal role leading to the conclusion of contracts that are routinely concluded without material

modification by the enterprise, and these contracts are:

a) in the name of the enterprise; or

b) for the transfer of the ownership of, or for the granting of the right to use, property owned by that enterprise or that the enterprise has the right to use; or

c) for the provision of services by that enterprise,

that enterprise shall be deemed to have a permanent establishment in that Contracting Jurisdiction in respect

of any activities which that person undertakes for the enterprise unless these activities, if they were exercised

by the enterprise through a fixed place of business of that enterprise situated in that Contracting Jurisdiction,

would not cause that fixed place of business to be deemed to constitute a permanent establishment under the

definition of permanent establishment included in the Covered Tax Agreement (as it may be modified by

this Convention).

2. Paragraph 1 shall not apply where the person acting in a Contracting Jurisdiction to a Covered Tax Agreement on behalf of an enterprise of the other Contracting Jurisdiction carries on business in the first-

mentioned Contracting Jurisdiction as an independent agent and acts for the enterprise in the ordinary course

of that business. Where, however, a person acts exclusively or almost exclusively on behalf of one or more

enterprises to which it is closely related, that person shall not be considered to be an independent agent within

the meaning of this paragraph with respect to any such enterprise.

3. a) Paragraph 1 shall apply in place of provisions of a Covered Tax Agreement that describe the conditions under which an enterprise shall be deemed to have a permanent establishment in a

Contracting Jurisdiction (or a person shall be deemed to be a permanent establishment in a

Contracting Jurisdiction) in respect of an activity which a person other than an agent of an

independent status undertakes for the enterprise, but only to the extent that such provisions

address the situation in which such person has, and habitually exercises, in that Contracting

Jurisdiction an authority to conclude contracts in the name of the enterprise.

b) Paragraph 2 shall apply in place of provisions of a Covered Tax Agreement that provide that an

enterprise shall not be deemed to have a permanent establishment in a Contracting Jurisdiction

in respect of an activity which an agent of an independent status undertakes for the enterprise.

4. A Party may reserve the right for the entirety of this Article not to apply to its Covered Tax Agreements.

5. Each Party that has not made a reservation described in paragraph 4 shall notify the Depositary of whether each of its Covered Tax Agreements contains a provision described in subparagraph a) of

5 DE ABRIL DE 2019____________________________________________________________________________________________________________

213