Dependent Agents as Permanent Establishments

S. 34I. Dependent Agent Permanent Establishment and Its Roots

A. Different permanent establishment concepts

The permanent establishment (PE) concept, as defined under article 5 of the OECD Income and Capital Model Convention (OECD Model) includes three different kinds of PEs, commonly known as the general PE (under article 5(1)), the construction PE (under article 5(3)) and the agent PE (under articles 5(5) and 5(6)).

The focus of this chapter will be on an analysis of the differences between the concept of general PE and that of agent PE, on the impact that the former concept might have on the latter and on the possible consequences that those differences might give rise to in the application of the PE concept in some other articles of the OECD Model.

Therefore, this chapter will consider the impact of article 5(1) on articles 5(5) and 5(6), and will relate the differences between the general PE provision and the agent PE provision with some other articles of the OECD Model. Finally, some conclusions from this analysis will be presented.

B. Historical background

The agent PE concept finds its origins in 1923, when four economists were appointed by the Financial Committee of the League of Nat...