Vessels or mobile drilling rigs might be “fixed” places of business if they move around within the same oil field

The starting point for considering whether a vessel or other piece of oil and gas equipment is a permanent establishment is to ask whether it is a fixed place of business through which the enterprise’s business is carried on. If a vessel or mobile drilling rig operates in an area that is considered to be geographically and commercially coherent, it may be considered to satisfy the “fixed place” aspect of this test. This could be the case for platform supply vehicles plying the same route repeatedly, or construction support vehicles working on only one subsea installation in the same oil field. It has been suggested this issue should be approached by considering each oil field to be one geographical area, so that a floating platform or rig moving around in the same oil field would, therefore, satisfy the geographically fixed criterion, though it is not fixed to the ground.

Whether a lessor carries on its business through the piece of equipment turns in part whether it is providing crew or other significant services - so that this question might turn on whether the lease is a time charter or bareboat charter.

Furthermore, “if a vessel is contracted to support the installation or removal of pipelines, subsea constructions or drilling rigs, this could be covered by the construction and installation provision in article 5(3) of the OECD Model.”

Neal Armstrong. Summary of Maja Stubbe Gelineck, "Permanent Establishments and the Offshore Oil and Gas Industry – Part 1," Bulletin for International Taxation, April 2016, p. 208 under Treaties – Art. 5.