Factors leading to formation of Dependent Agency Permanent Establishment
- The assessee had remunerated the dependent agent on account of advertisement revenue on arm’s length price for the services rendered by him.
- In cases, where the enterprise does not have a fixed place of business in the other Contracting State, of the nature described in article 5(2) or otherwise, the enterprise would still be deemed to have a permanent establishment.
- Article 5(8) provides that where an agent, other than an independent agent to which article 5(9) applies, satisfies one of the conditions set out in article 5(8)(a), 5(8)(b) or 5(8)(c), “the enterprise shall be deemed to have permanent establishment” in the other Contracting State.
- In simple terms, therefore, when an enterprise acts in the other Contracting State through a ‘dependent agent’ who satisfies at least one of the tests set out in article 5(8), such an enterprise is deemed to have a permanent establishment in the other Contracting State, known as dependent agent permanent establishment.