handbook-tb

Adolfo Martín Jimenéz5.2.4.5 Anti-fragmentation and commissionaire clausesClauses against the most common avoidance structures of PE statushave been used in tax treaties for a long time by some countries. In thisrespect, the Australian experience — one of the first countries whichhad judicial decisions on these types of tax planning transactions — isa useful example. 114 Australia adds three different types of clauses:‣ ¾ A deemed PE for non-residents having contract-manufactures/maquila services in the other country, which may have twoforms. It is either included in the equivalent of Article 5 (3) 115 orArticle 5 (6) of the OECD Model Convention (in the latter case tofacilitate the application of the independent agent exception); 116‣ ¾ Article 5 (4) is drafted so that it is clear that the preliminary andauxiliary conditions apply to the whole paragraph and not onlyto subparagraph (f);‣ ¾ The equivalent of Article 5 (5) of the United Nations and OECDModel Conventions does not refer to the controversial “in thename of” and mentions only “on behalf of” in connection with114See R. Vann, “Tax Treaties: The Secret Agent’s Secrets,” supra note 37.115See, for example, Article 5 (3) of the tax treaty between the UnitedKingdom and Australia (2003): “An enterprise shall be deemed to have apermanent establishment in a Contracting State and to carry on businessthrough that permanent establishment if: … c) a person acting in a ContractingState on behalf of an enterprise of the other Contracting State manufacturesor processes in the first-mentioned State for the enterprise goods ormerchandise belonging to the enterprise.”116See, for example, Article 5 (7) of the tax treaty between Finland andAustralia (2006): “Notwithstanding the provisions of paragraphs 1 and 2,where a person — other than an agent of an independent status to whomparagraph 8 applies — is acting on behalf of an enterprise and: a) has, andhabitually exercises, in a Contracting State an authority to substantiallynegotiate or conclude contracts on behalf of the enterprise; or b) manufacturesor processes in a Contracting State for the enterprise goods or merchandisebelonging to the enterprise, that enterprise shall be deemed to have apermanent establishment in that State in respect of any activities which thatperson undertakes for that enterprise, unless the activities of such person arelimited to those mentioned in paragraph 6 and are, in relation to the enterprise,of a preparatory or auxiliary character.”394