Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
XXXXXXXXXX
Attention: XXXXXXXXXX
Dear Sirs:
RE: Determining a Canadian Permanent Establishment ("PE") Pursuant to the Canada-U.S. Income Tax Convention (the "Treaty")
This is in reply to your letter of October 28, 1992 and further to our telephone conversation (XXXXXXXXXX/Middleton) wherein you requested our opinion on whether there was a Canadian PE under Article V of the Treaty in the particular situation described in your letter.
The facts described in your letter appear to involve a particular taxpayer and an existing situation and, as you know, theRulings Directorate does not provide opinions in respect of existing situations. For assistance in this matter, you should contact your District Office. Although we cannot provide you with a answer to your question for the reasons mentioned above, we offer the following general comments.
The U.S. Corporation described in your letter would be considered to be carrying on business in those locations where its employees, including the sales force in Canada, perform their employment duties. With respect to whether the U.S. Corporation has a P.E. in Canada, it appears that the sales force represents a substantial presence in Canada and it is quite possible that the activities of the sale force would be regarded as being stable or permanent activities of the U.S. Corporation in Canada.
Based on the limited facts presented to us, it is our initial view that the U.S. Corporation has a fixed place of business and a permanent establishment in Canada for the purposes of Article V of the Treaty. The comments contained in the Commentary to Article 5 of the OECD Model provide some support for our view.
We trust these comments will be of some assistance to you.
Yours truly,
for DirectorReorganizations and Foreign DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
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