Article 5 - Permanent Establishment - Slovak Republic

ARTICLE 5 PERMANENT ESTABLISHMENT 1. For the purposes of this agreement, the term permanent establishment means a fixed place of business in which the business of the enterprise is wholly or partly carried on. 2. The term permanent establishment shall include: (a) a place of management; (b) a branch; (c) an office; (d) a factory; (e) a workshop or a warehouse; (f) a mine, a quarry, an oil field or other place of extraction of natural resources; (g) [MODIFIED by paragraph 1 of Article 14 of the MLI] [a building site or construction or assembly project or supervisory activities in connection therewith, where such site, project or supervisory activity continues for a period of more than six months, or where such project or supervisory activity, being incidental to the sale of machinery or equipment, continues for a period not exceeding six months and the charges payable for the project or supervisory activity exceed 10 per cent of the sale price of the machinery or equipment.] The following paragraph 1 of Article 14 of the MLI applies and supersedes subparagraph (g) of paragraph 2 of Article 5 of this Agreement: ARTICLE 14 OF THE MLI SPLITTING-UP OF CONTRACTS For the sole purpose of determining whether the period (or periods) referred to [in subparagraph (g) of paragraph 2 of Article 5 of the Agreement] has been exceeded: (a) where an enterprise of a [Contracting State] carries on activities in the other [Contracting State] at a place that constitutes a building site [or] construction or [assembly project], or carries on supervisory activities in connection with such a place, and these activities are carried on during one or more periods of time that, in the aggregate, exceed 30 days without exceeding period or periods referred to in [ subparagraph (g) of paragraph 2 of Article 5 of the Agreement]; and (b) where connected activities are carried on in that other [Contracting State] at the same building site [or] construction or [assembly project] or [supervisory activities in connection therewith] during different periods of time, each exceeding 30 days, by one or more enterprises closely related to the first-mentioned enterprise, these different periods of time shall be added to the aggregate period of time during which the first-mentioned enterprise has carried on activities at that building site [or] construction or [assembly project,] or [supervisory activities in connection therewith]. 3. [MODIFIED by paragraph 2 of Article 13 of the MLI] [The term permanent establishment shall not be deemed to include: (a) the use of facilities solely for the purpose of storage or display 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 or display; (c) the maintenance of stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by an enterprise of the other Contracting State; (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 or for scientific research, being activities solely of a preparatory or auxiliary character in the trade or business of the enterprise. However, this provision shall not be applicable where the enterprise maintains any other fixed place of business in the other Contracting State for any purpose or purposes other than the purposes herein specified.] The following paragraph 2 of Article 13 of the MLI applies with respect to the paragraph 3 of Article 5 of this Agreement: ARTICLE 13 OF THE MLI ARTIFICIAL AVOIDANCE OF PERMANENT ESTABLISHMENT STATUS THROUGH THE SPECIFIC ACTIVITY EXEMPTIONS Notwithstanding [Article 5 of the Agreement], the term permanent establishment shall be deemed not to include: (a) (i) the use of facilities solely for the purpose of storage or display of goods or merchandise belonging to the enterprise; (ii) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display; (iii) the maintenance of stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by an enterprise of the other Contracting State; (iv) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or for collecting information, for the enterprise; (v) the maintenance of a fixed place of business solely for the purpose of advertising, for the supply of information or for scientific research, being activities solely of a preparatory or auxiliary character in the trade or business of the enterprise. However, this provision shall not be applicable where the enterprise maintains any other fixed place of business in the other Contracting State for any purpose or purposes other than the purposes herein specified. (b) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any activity not described in subparagraph a); (c) the maintenance of a fixed place of business solely for any combination of activities mentioned in subparagraphs a) and b), provided that such activity or, in the case of subparagraph c), the overall activity of the fixed place of business, is of a preparatory or auxiliary character. The following paragraph 4 of Article 13 of the MLI applies to paragraph 3 of Article 5 of the Agreement as modified by paragraph 2 of Article 13 of the MLI: [Paragraph 3 of Article 5 of the Agreement, as modified by paragraph 2 of Article 13 of the MLI] shall not apply to a fixed place of business that is used or maintained by an enterprise if the same enterprise or a closely related enterprise carries on business activities at the same place or at another place in the same [Contracting State] and: (a) that place or other place constitutes a permanent establishment for the enterprise or the closely related enterprise under the provisions of [Article 5 of the Agreement]; or (b) the overall activity resulting from the combination of the activities carried on by the two enterprises at the same place, or by the same enterprise or closely related enterprises at the two places, is not of a preparatory or auxiliary character, provided that the business activities carried on by the two enterprises at the same place, or by the same enterprise or closely related enterprises at the two places, constitute complementary functions that are part of a cohesive business operation. 4. A person acting in a Contracting State for or on behalf of an enterprise of the other Contracting State other than an agent of an independent status to whom paragraph 5 applies - shall be deemed to be a permanent establishment of that enterprise in the first mentioned Contracting State if: (a) [ MODIFIED by paragraph 1 of Article 12 of the MLI] [he has, and habitually exercises in that Contracting State, an authority to negotiate and enter into contracts for or on behalf of the enterprise, unless his activities are limited to the purchase of goods or merchandise for the enterprise; or] The following paragraph 1 of Article 12 of the MLI applies with respect to the subparagraph (a) of paragraph 4 of Article 5 of this Agreement: ARTICLE 12 OF THE MLI ARTIFICIAL AVOIDANCE OF PERMANENT ESTABLISHMENT STATUS THROUGH COMMISSIONNAIRE ARRANGEMENTS AND SIMILAR STRATEGIES Notwithstanding [Article 5 of the Agreement], but subject to [paragraph 5 of Article 5 of the Agreement as modified by paragraph 2 of Article 12 of the MLI], where a person is acting in a [Contracting State] 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 State] 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 State], 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 provisions of [Article 5 of the Agreement]. (b) he habitually maintains in the first mentioned Contracting State a stock of goods or merchandise belonging to the enterprise from which he regularly delivers goods or merchandise for or on behalf of the enterprise; or (c) he habitually secures orders in the first mentioned Contracting State exclusively or almost exclusively, for the enterprise itself, or for the enterprise and other enterprises which are controlled by it or have a controlling interest in it. 5. [ MODIFIED by paragraph 2 of Article 12 of the MLI] [An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an individual status, where such persons are acting in the ordinary course of their business.] The following paragraph 2 of Article 12 of the MLI applies with respect to paragraph 5 of Article 5 of this Agreement: ARTICLE 12 OF THE MLI ARTIFICIAL AVOIDANCE OF PERMANENT ESTABLISHMENT STATUS THROUGH COMMISSIONNAIRE ARRANGEMENTS AND SIMILAR STRATEGIES [Paragraph 4 of Article 5 of the Agreement as modified by Paragraph 1 of Article 12 of the MLI] shall not apply where the person acting in a [Contracting State] on behalf of an enterprise of the other [Contracting State] carries on business in the first-mentioned [Contracting State] 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. 6. The fact that a company, which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other Contracting State (whether through a permanent establishment or otherwise) shall not, of itself, constitute either company a permanent establishment of the other. 7. An enterprise of a Contracting State shall be deemed to have a permanent establishment in the other Contracting State if it carries on business which consists of providing the services of public entertainers (such as stage, motion picture, radio or television artists and musicians) or athletes in that other Contracting State unless the enterprise is directly or indirectly supported wholly or substantially, from the public funds of the Government of the first mentioned Contracting State in connection with the provision of such services. The following paragraph 1 of Article 15 of the MLI applies to this Agreement: ARTICLE 15 OF THE MLI DEFINITION OF A PERSON CLOSELY RELATED TO AN ENTERPRISE For the purposes of the provisions of [Article 5 of the Agreement as modified by paragraph 2 of Article 12, paragraph 4 of Article 13 and paragraph 1 of Article 14 of the MLI], a person is closely related to an enterprise if, based on all the relevant facts and circumstances, one has control of the other or both are under the control of the same persons or enterprises. In any case, a person shall be considered to be closely related to an enterprise if one possesses directly or indirectly more than 50 per cent of the beneficial interest in the other (or, in the case of a company, more than 50 per cent of the aggregate vote and value of the company's shares or of the beneficial equity interest in the company) or if another person possesses directly or indirectly more than 50 per cent of the beneficial interest (or, in the case of a company, more than 50 per cent of the aggregate vote and value of the company's shares or of the beneficial equity interest in the company) in the person and the enterprise.