Introduction

Action Item 7 of the OECD/ G20 Action Plan on Base Erosion and Profit Shifting (BEPS) project deals with measures to counter certain commonly employed strategies for artificial avoidance of permanent establishment (PE). The commissionaire arrangement is one such strategy frequently observed in certain jurisdictions. As discussed in this article, in couple of landmark cases, taxpayers have been able to successfully argue that commissionaire arrangements could not give rise to a dependent agency PE. The BEPS Action Item 7 recommends amendments to Art. 5 of the OECD MC with the objective of bringing the commissionaire arrangements within the framework of dependent agency PE.

What is a ‘commissionaire arrangement’?

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