{"id":1151,"date":"2014-06-02T16:51:21","date_gmt":"2014-06-02T16:51:21","guid":{"rendered":"https:\/\/thor.ca\/\/blog\/?p=1151"},"modified":"2014-06-02T16:51:32","modified_gmt":"2014-06-02T16:51:32","slug":"cra-provides-views-on-construction-services-pe-in-canada-us-treaty","status":"publish","type":"post","link":"https:\/\/www.thor.ca\/blog\/2014\/06\/cra-provides-views-on-construction-services-pe-in-canada-us-treaty\/","title":{"rendered":"CRA provides views on construction-services PE in Canada-US treaty"},"content":{"rendered":"

Article V, paragraph 3, of the Canada-US tax treaty (Treaty) provides that a \u201cbuilding site or construction or installation project\u201d constitutes a permanent establishment (PE) if, but only if, it lasts more than 12 months.\u00a0 Furthermore, Article V, paragraph 9(b), of the Treaty provides that where a U.S. enterprise does not otherwise have a PE in Canada (under the other paragraphs of Article V), that enterprise is deemed<\/em> to have a PE in Canada if and only that enterprise provides services in Canada for an aggregate of 183 days or more in any 12-month period with respect to the same or connected project for Canadian-resident customers (or for a Canadian PE of non-resident customers).\u00a0 In 2013-0475161I7<\/a>, the CRA confirmed its guidance on a number of conceptual questions arising from these two paragraphs in the context of a U.S. resident parent company (US Co) providing intellectual, planning, and supervisory services \u2013 in Canada \u2013 to its numerous Canadian affiliates in respect of various development operations of these Canadian affiliates.<\/p>\n

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  1. Seconded Employees<\/u>: If US Co’s employees are in fact under the supervision of (seconded to) the Canadian affiliates, then the services provided by these U.S. employees would not<\/em> be counted in determining whether US Co itself has a PE in Canada (see p. 5).<\/li>\n
  2. Intellectual Services<\/u>: Intellectual, planning, and supervisory services are relevant for determining a PE under Article V, paragraph 3, but only<\/em> those services that are actually rendered at the site<\/em> (see p. 7).<\/li>\n
  3. Paragraph 3 vs Paragraph 9<\/u>: If a PE exists under Article V, paragraph 3, only those services provided offsite<\/em> would be considered in determining whether a PE also exists under Article V, paragraph 9.\u00a0 If no PE exists under Article V, paragraph 3, then all<\/em> of the services in Canada can be considered in determining whether a PE exists under Article V, paragraph 9 (see p. 22).<\/li>\n
  4. Enterprise<\/u>: The term “enterprise” in Article V, paragraph 9 refers only<\/em> to a particular \u201cline of business\u201d carried on by US Co.\u00a0 Therefore, where US Co carries on two lines of business, for example, US Co may have a PE by reference to one line of business but not the other (see p. 11).\u00a0 A \u201cline of business\u201d will be determined based on the Canadian domestic concept of \u201cseparate businesses\u201d (see p. 11).<\/li>\n
  5. Integrated Business<\/u>: Here the CRA viewed US Co as carrying on a single<\/em> integrated business, being the business of planning and executing development projects in Canada for its Canadian affiliates (see p. 14).<\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"

    Article V, paragraph 3, of the Canada-US tax treaty (Treaty) provides that a \u201cbuilding site or construction or installation project\u201d constitutes a permanent establishment (PE) if, but only if, it lasts more than 12 months.\u00a0 Furthermore, Article V, paragraph 9(b),…<\/p>\n","protected":false},"author":11,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"class_list":["post-1151","post","type-post","status-publish","format-standard","hentry","category-corporate-tax"],"_links":{"self":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts\/1151","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/users\/11"}],"replies":[{"embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/comments?post=1151"}],"version-history":[{"count":0,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts\/1151\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/media?parent=1151"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/categories?post=1151"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/tags?post=1151"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}