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2019 WU Transfer Pricing Symposium
Attribution of Profits to Permanent Establishments: Current Developments, Relevant Issues, and Possible Solutions
WU (Vienna University of Economics and Business)
Welthandelsplatz 1
1020 Vienna

2019 WU Transfer Pricing Symposium

Attribution of Profits to Permanent Establishments:

Current Developments, Relevant Issues and Possible Solutions




8.30 – 9.00

Registration and welcome coffee


9.00 – 9.15


9.15 – 10.45

Session 1: Art 7 AOA vs Art 9 OECD/UN Models

The OECD’s work under the Authorised OECD Approach (AOA), BEPS Action 7 as well as under BEPS Actions 8-10 have minimized the gap between the principles of profit attribution under article 7 and article 9 of the OECD Model. This session will examine, with the use of practical case studies, what is identical and what is different in the structure, content and purposes of both articles in the post-BEPS world. In particular, it will address the notions of “significant people functions”, for the purposes of article 7, and “conduct of the parties” as well as “significant functions”, for the purposes of article 9, as well as the characterization of “transactions” vs “dealings”.


11.15 – 12.45

Session 2: Profit Attribution to PEs and PE Exemptions (Art 5 para 4)

The OECD work on BEPS Action 7 has aimed to modify the PE definition to prevent its circumvention by taxpayers. The changes to the PE concept as an outcome of this work were incorporated into article 5 of 2017 OECD Model Convention. Later on, the OECD released an additional guidance on how the existing rules of Article 7 would apply to PEs resulting from these changes. In this respect, this session will first focus on the amended content of article 5(4) of the OECD Model and how the threshold of core activities should be defined.

Further, the session will explore how to deal with the anti-fragmentation rule in the new paragraph 4.1 of Article 5. Finally, it will be demonstrated, by means of practical case studies, how profits should be attributed to PEs in these situations.


12.45 - 14.00


14.00 – 15.30

Session 3: Profit Attribution to Agency PEs (Art 5 para 5 and 6)

The BEPS related changes to the PE definition also covered the Dependent Agent PE (DAPE) concept. As a result of the OECD work under BEPS Action 7, the DAPE definition has been broadened to include commissionaire arrangements, namely contracts concluded by an agent on behalf of, but not necessarily in the name of, its principal, for the transfer of the principal’s property. The Additional Guidance on Attribution of profits to a PE also illustrated the different rules on profit allocation to a DAPE resulting from the changes in the definition of the concept. The session will explore, in particular, whether the differences in application of Articles 7 and 9 of the OECD Model will have an impact on the result of profit allocation. Practical case studies will demonstrate how profits should be allocated to a DAPE in view of the underlying functionalities.

16.00 – 17.30

Session 4: Profit Attribution to Significant Economic Presence

The recent introduction into the tax legislations of some countries (e.g. India, Israel and Italy) of the definitions of “digital” PEs, whereby a PE of a non-resident company is deemed to exist in a country when that non-resident company has a significant and continuous economic presence in that country without having any physical presence, will necessarily generate the issue of assessing how much profits to attribute to a digital PE. This significant issue is still open to discussions and different interpretations. This session aims at illustrating the recent OECD and EU developments on the issue by means of practical case studies, as well as by providing some preliminary solutions to the issue.


17.30 – 17.40

Concluding remarks

Our Speaker(s)

Prof. Dr. Axel Nientimp
Certified Tax Consultant, Tax Attorney
6th Annual Corporate Tax Summit
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Frankfurt am Main
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