The 12-month period for an installation PE should stop running when work at the project is suspended for external reasons

The OECD Model Treaty states that "a building site or construction or installation project constitutes a permanent establishment only if it lasts more than twelve months." Hourdin suggests among other things that:

• As Art. 5(3) applies on a project by project basis, "it is therefore possible for an enterprise resident in a state to operate in another country on a significant scale, in terms of cumulative time and total volume of business, without having a PE."
• An example of the application of the OECD commentary statement that "a building site should be regarded as a single unit, even if it is based on several contracts, provided that it forms a coherent whole commercially and geographically," is the installation of a country-wide radar sytem for use by air traffic controllers even where there are "10 separate contracts with 10 airport companies."
• Although the OECD commentary states for purposes of the 12-month test that "a site should not be regarded as ceasing to exist when work is temporarily discontinued," this rule "should allow for a suspension of the 12-month period if the taxpayer provides sufficient evidence of total interruption of work because of external reasons."

Neal Armstrong. Summary of Pierre-Marie Hourdin, "Is the Construction PE Clause in the OECD Model Treaty Satisfactory?", Tax Notes International, July 21, 2014, p. 229 under Treaties – Art. 5.