A recent US Supreme Court decision in an environmental case may offer guidance on the question whether a subsidiary will be deemed to be a permanent establishment of its parent corporation.
Introduction
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The 1992 model tax convention on income and on capital of the Organization for Economic Cooperation and Development (OECD), as revised in 1997 provides that:
[t]he fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.3
