1.      Introduction

Art. 5 of the most contemporary tax treaties define a “permanent establishment” as a “fixed place of business through which the business of an enterprise is wholly or partly carried on.”

As a prerequisite, for a place of business to be regarded as “fixed” for the purposes of a fixed place permanent establishment, the place of business must have a certain ‘degree of permanence’ (i.e. ‘time threshold’, which may also be referred to as ‘the duration test’). Though Art. 5 of the tax treaties does not specify the threshold for the duration test, often, six-month duration is considered appropriate.

In this article, we would look at two decisions wherein the courts opined that six-month was the threshold for the purpose of the duration test.