There are, however, some departures found in a number of treaties. As foreshadowed in the UN Commentary, not all treaties include the requirement that the services be provided “for the same or a connected project”. Chile, for example, does not include this requirement, with the result that under Chilean treaties, a nonresident SP will have a PE if the time requirement is met, irrespective of whether the services are provided for one project or for many unrelated projects. Similarly, the Czech Republic Model Treaty does not include the same or a connected project limitation, nor do many of the treaties concluded by India and New Zealand.
Some treaties include an anti-avoidance provision that aggregates time periods spent by associated enterprises in carrying on the same or similar service activities, e.g. New Zealand treaties and Peru's treaties with Chile and Canada.
As the UN Model also includes Article 14 dealing with independent personal services, countries that adopt the UN services PE provisions generally also include an independent personal services article. Accordingly the scope of the services PE provision under such treaties ordinarily does not cover professional or other independent personal services. The taxation of independent personal services is discussed in section 2.2 below.
As with the fixed place of business PE, Article 7 ensures that income derived through a services PE is taxed on a net basis, i.e. it provides that only profits attributable to the relevant service activities will be taxable?
In most treaties, only profits attributable to the PE may be taxed in the jurisdiction in which the PE is situated. In the case of services, this generally refers to income from services that are performed through the PE. However, Article 7(1 )(c) of the UN Model includes a limited force of attraction rule which provides for taxation of the profits of an enterprise that are attributable to business activities carried on in the other State of the same or a similar kind as those effected through a PE. If a non-resident SP has a fixed place of business PE through which service activities are carried on. income from other similar services performed in the jurisdiction that are not connected with the PE could be taxed in the jurisdiction. In the case of a services PE that follows the UN Model, the provision would seem to have the effect of extending source taxing rights to income from all similar services furnished in the jurisdiction, irrespective of whether they are for the same or a connected project. Despite the inclusion of this provision in the UN Model, only the branch reports for Argentina and India noted that this type of provision was commonly found in their treaties. This is consistent with the findings of Wijnen, de Goede and Alessi who, in their study of over 1.500 tax treaties concluded between 1997 and 2010, found that limited force of attraction was included in only 9 per cent of treaties, excluding treaties between OECD countries (where it was found in only 1 per cent of treaties).