Page 44 - International Taxation IRS Training Guides

Illustration: Income Attributable to PE

 Permanent Establishment:

Example 1: Treaty exempts payments • Fixed place through which
carried on
tax
that are otherwise ECI from U.S. business is
• Places of management
• Factories
Corporation Unrelated • Offices

(Country Y) e.g., sales
U.S. • Long-term construction sites
Corp

income
• Income attributable to
activities of dependent agents
• Need not be owned or leased
Regular U.S. if regularly available to
activities (no
fixed taxpayer

location)  Attributable to:

• Net income economically

generated by the activities of the
PE.

• Treaty
may also reduce
withholding on non­

business
income.
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