A Spanish enterprise has a fixed place of business in India. Under Article 5 of the India-Spain tax treaty, which use of that place makes it a permanent establishment?
Question and options
A Spanish enterprise has a fixed place of business in India. Under Article 5 of the India-Spain tax treaty, which use of that place makes it a permanent establishment?
Using it solely to purchase goods or collect information
Using it solely to keep stock for processing by another enterprise
Using it solely to store and display its goods
Using it solely as a factory to manufacture its goods
Answer and explanation
Article 5(2)(d) of the India-Spain treaty lists a factory as a permanent establishment, because manufacturing there is a core business activity. Article 5(3) excludes facilities used solely for storage or display of goods, stock kept solely for processing by another enterprise, and a place used solely for purchasing goods or collecting information, as preparatory or auxiliary activities.
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