Agents as permanent establishments under the OECD model tax convention

Paragraphs 5 and 6 of Article 5 of the 1992 OECD Model Tax Convention contain the parts of the definition of permanent establishment dealing with the question of whether an agent constitutes a permanent establishment of his principal. The reference in paragraph 5 to a person having an authority to c...

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Bibliographic Details
Published in:British tax review 1993-01, Vol.5 (5), p.341-341
Main Authors: Jones, John F. Avery, Ward, David A
Format: Article
Language:English
Subjects:
Authority
Civil law
Common law
Contracts
Definitions
Federal legislation
Financial executives
Fiscal law
Insurance agents & brokers
OECD
Permanent establishment
Principals
Tax treaties
United Kingdom
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Summary:Paragraphs 5 and 6 of Article 5 of the 1992 OECD Model Tax Convention contain the parts of the definition of permanent establishment dealing with the question of whether an agent constitutes a permanent establishment of his principal. The reference in paragraph 5 to a person having an authority to conclude contracts in the name of an enterprise means that the agent has authority to conclude contracts binding on his principal. Assuming that paragraph 5 originated in French, the English is a literal translation of a civil law term of art that should have been translated differently. Paragraph 6 operates as an exception to paragraph 5 and excludes from the definition of permanent establishment independent agents where the principal is bound by contracts made by his agent, so long as the agent is acting on the ordinary course of his business.
ISSN:0007-1870