CRA finds that a Canadian equipment installation project which exceeded 12 months, including on-site preparation of plans and final testing, was a permanent establishment

CRA found that a contract of a French company to install specialized equipment at a Canadian factory of an arm’s length Canadian company gave rise to a Canadian permanent establishment of it given its general on-site responsibility for ensuring a successful project and given that the the project lasted more than 12 months including preparing detailed specs on-site and final testing – so that the 12 month safe harbour for installation projects in Art. 5, para. 3 of the Canada-France Convention was not available.  The Directorate’s analysis essentially stopped after finding that the project was an installation project that lasted more than 12 months, so this may imply (see also Dudney) a view that installation projects which exceed this limit will invariably be pe’s on general principles.

Neal Armstrong. Summary of 11 April 2014 T.I. 2013-0474851I7 F under Treaties – Art. 5.