DT8002 - DT: Germany, Federal Republic: double taxation agreement, Article 3: Industrial or commercial profits

(1) The industrial or commercial profits of an enterprise of one of the territories shall be subjected to tax only in that territory unless the enterprise carries on a trade or business in the other territory through a permanent establishment situated therein. If it carries on a trade or business in that other territory through a permanent establishment situated therein, tax may be imposed on those profits in the other territory but only on so much of them as is attributable to that permanent establishment.

(2) The share of the industrial or commercial profits of an undertaking accruing to a partner therein who is a resident of one of the territories shall likewise be subjected to tax only in that territory unless the undertaking carries on a trade or business in the other territory through a permanent establishment situated therein. If it carries on a trade or business in that other territory through a permanent establishment situated therein tax may be imposed in the other territory on the share of the profits accruing to that partner, but only on so much as represents his share of the profits attributable to the permanent establishment.

(3) Where an enterprise of one of the territories carries on a trade or business in the other territory through a permanent establishment situated therein, there shall be attributed to that permanent establishment the industrial or commercial profits which it might be expected to derive in that other territory if it were an independent enterprise engaged in the same or similar activities under the same or similar conditions and dealing at arm's length with the enterprise of which it is a permanent establishment.

(4) No portion of any profits arising to an enterprise of one of the territories shall be attributed to a permanent establishment situated in the other territory by reason of the mere purchase of goods or merchandise within that other territory by the enterprise.

(5) Paragraphs (1) and (2) of this Article shall not be construed as preventing one of the Contracting Parties from imposing pursuant to this Convention tax on dividends or income from immovable property derived from sources within its territory by a resident of the other territory even if such dividends or income are not attributable to a permanent establishment in the first-mentioned territory.

(6) Paragraphs (1) and (2) of this Article shall likewise apply in respect of the Gewerbesteuer (trade tax) computed on a basis other than industrial or commercial profits.