In 2008 the OECD Commentary on Article 5 of the OECD Model was amended to include an alternative services PE provision that jurisdictions wishing to do so might adopt in their treaties.
The alternative services PE provision is as follows:
“Notwithstanding the provisions of paragraphs 1. 2 and 3. where an enterprise of a Contracting State performs services in the other Contracting State:
- through an individual who is present in that other State for a period or periods exceeding in the aggregate 183 days in any twelve-month period, and more than 50 per cent of the gross revenues attributable to active business activities of the enterprise during this period or periods are derived from the services performed in that other State through that individual, or for a period or periods exceeding in the aggregate 183 days in any twelve month period, and these services are performed for the same project, or
- for connected projects through one or more individuals who are present and performing such serv ices in that other State
the activities carried on in that other State in performing these services shall be deemed to be carried on through a permanent establishment of the enterprise situated in that other State, unless these services are limited to those mentioned in paragraph 4 which, if performed through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph. For the purposes of this paragraph, services performed by an individual on behalf of one enterprise shall not be considered to be performed by another enterprise through that individual unless that other enterprise supervises, directs or controls the manner in which these services are performed by the individual.”
The alternative services PE provision differs from the UN Model provision in a number of respects.
In the first place, it applies two different thresholds. The first deals with services provided by enterprises carried on by, or mainly by, a single person, while the second (like the UN Model provision) applies to enterprises that perform services in relation to a single project or connected projects.