Permanent establishment means a permanent place or facility for the performance of activities, through which taxpayers with limited tax liability carry out all or part of their activities in the territory of the Slovak Republic.
Permanent establishment may take various forms:
"Location test" - The existence of a place or facility to perform activities
"Time test" - Permanence (stability) of the place of business
Article 5 of Double Tax Treaty, defines a permanent establishment as
Article 7 named „Profits of enterprises“ in double tax treaties provides that one of the Contracting States may not tax the income of an enterprise of the other Contracting State unless it carries on business through a permanent establishment situated in that other State.
The country in which the enterprise has its permanent establishment shall be entitled to tax only the income of that permanent establishment situated in the territory of that State. The individual income of a permanent establishment, which the country has the right to tax, is defined in the Income Tax Act in § 16 par. 1 as follows:
Fulfillment of the conditions defined in the law and at the same time in the double taxation agreement creates an obligation for a permanent establishment to tax income from sources in the territory of another state in this other state.
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