handbook-tb

Brian J. Arnoldconstruction and other related activities must be conducted through afixed place of business to be a PE. 423.4 Services in generalUnder Article 5 (3) (b) of the United Nations Model Convention, the furnishingof services by a non-resident is deemed to be a PE if the activitiescontinue in the source country for 183 days or more in any 12-monthperiod and take place with respect to the same or a connected project.For this purpose only days during which services are performed in thesource country by the enterprise through employees or other personnel(“working days”) are taken into account. Days during which employeesor other personnel are merely present in the source country but arenot working are not counted. Projects are considered to be connected ifthey have commercial coherence, which is a question of fact. If, however,projects are carried out pursuant to contracts concluded with the sameperson or related persons and involve the same type of work, they willordinarily be considered to be connected especially if the same individualsperform the services under the various projects.3.5 InsuranceUnder Article 5 (6) of the United Nations Model Convention, a PEis deemed to exist where a non-resident enterprise collects insurancepremiums or insures risks in the source country, unless such activitiesare conducted by independent agents. Article 5 (6) does not requirethe activities to occur through a fixed place of business in the sourceplace in different geographical locations would be aggregated for the purposeof the six-month time threshold if they are part of the same project. However,if construction activities must meet the requirements of Article 5 (1), it wouldbe necessary to consider each place where construction activities occur separately.Article 5 (3) of the OECD Model Convention is clearly an additionalcondition not a deeming rule.42 This conclusion raises the issue of whether or not Article 5 (3) (b) ofthe United Nations Model Convention is a deeming provision. In the author’sview, Article 5 (3) (b) is clearly a deeming provision, although there is an argumentthat both Article 5 (3) (a) and (b) must be construed in the same manner.If, therefore, Article 5 (3) (a) is not a deeming provision, it can be argued thatArticle 5 (3) (b) should also not be considered to be a deeming provision.66