Direct Tax Avoidance Agreements

Swiss Confederation

Article 5 : Permanent establishment

     1. For the purposes of this Agreement, the term "permanent establishment" means a fixed place of business through which the business of the enterprise is wholly or partly carried on.

     2. The term "permanent establishment" shall include especially :

          (a) a place of management;

          (b) a branch;

          (c) an office;

          (d) a store or other sales outlet;

          (e) a factory;

          (f)  a workshop;

          (g) a warehouse in relation to a person providing storage facilities for others;

          (h) a permanent sales exhibition;

          (i)  a mine, a quarry, an oil or gas well, or any other place of extraction of natural resources;

          (j)  a building site or construction, installation 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;

          (k) an installation or structure used for the exploration or development of natural resources for more than 90 days; and

          (l)  the furnishing of technical services, other than services as defined in article 12, within a ContractingState by an enterprise through employees or other personnel, but only if:

               (i)  activities of that nature continue within that State for a period or periods aggregating more than 90 days within any twelve-month period; or

               (ii) the services are performed within that State for a related enterprise (within the meaning of paragraph 1 of Article 9) for a period or periods aggregating more than 30 days within any twelve-month period.

     3. 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 a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

          (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 auxilliary character in the trade or business of the enterprise.

          (f) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxilliary character.

     4. Notwithstanding the preceding provisions of this article, an insurance enterprise of a Contracting State shall, except in regard to re-insurance, be deemed to have a permanent establishment in the other Contracting State if it collects premiums in the territory of that other State or insures risks situated therein through a person other than an agent of an independent status to whom paragraph 6 applies.

     5. 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 6 applies]--shall be deemed to be a permanent establishment of that enterprise in the first-mentioned State if:

          (i) he has and habitually exercises in that 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

          (ii) he habitually maintains in the first-mentioned Contracting State a stock of goods or merchandise from which he regularly delivers goods or merchandise for or on behalf of the enterprise; or

          (iii) in so acting, he manufactures or processes in that State for the enterprise goods or merchandise belonging to the enterprise, provided that this provision shall apply only in relation to the goods or merchandise so manufactured or processed.

     6. An enterprise of a ContractingState shall not be deemed to have a permanent establishment in the other ContractingState merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status, where such persons are acting in the ordinary course of their business.  However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise or for the enterprise and other enterprises which are controlled by it or have a controlling interest in it, he would not be considered an agent of an independent status within the meaning of this paragraph.

     7. 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 for either company a permanent establishment of the other.]