Print Print

Definition of “Permanent Establishment” changes January 1, 2010

Definition of “Permanent Establishment” changes January 1, 2010

Permanent Establishment - Overview
Effective January 1, 2010 the fifth protocol to the US Canada Tax Treaty introduced a new definition of “Permanent Establishment”.  As a result of this change cross border contractors will be deemed to have a permanent establishment in the other country if either:

Permanent Establishment - The Single Individual Test (for Individuals)
Services are performed by an individual who is present in the other Contracting State for more than 183 days in a 12-month period and, during this period, more than 50% of the gross active revenues of the enterprise are generated from these services; or

Permanent Establishment - The Enterprise Test (for Corporations)
Services are provided in the other Contracting State for more than 183 days in a 12-month period with respect to the same or connected project for a customer’s PE in the other Contracting State

All foreign corporations who perform services in Canada must  report the Canadian income to the Canadian Revenue Agency, whether or not a permanent establishment in Canada exists.

Contact Jon Levy at or (514) 282-1836 #275 for more informaton regarding this important change to the US Canada Tax Treaty.

Click here for information regarding withholding taxes for Americans providing services in Canada.

Click here for details about the UHY Canada U.S. Tax Team (CUTT).



« back to news


What are the CRA auto limits and rates? (2017, 2016, 2015 and 2014)

» more

What is the TFSA and how much can I contribute to it?

» more

What are the new cheque-printing standards?

» more

Société de comptables
professionnels agréés •
Partnership of Chartered
Professional Accountants

759, rue du Square-Victoria, #400
Montréal, Québec, H2Y 2J7

+1 514 282 1836

UHY VICTOR UHY VICTOR LLP (the “Firm”) is a member of Urbach Hacker Young International Limited, a UK company, and forms part of the international UHY network of legally independent accounting and consulting firms. UHY is the brand name for the UHY international network. The services described herein are provided by the Firm and not by UHY or any other member firm of UHY. Neither UHY nor any member of UHY has any liability for services provided by other members.