Article 7 - Location of an Entity

The State or Jurisdiction is considered the location of the Entity according to the following controls:

1. The location of an Entity that is not a Flow-through entity is determined as per the following controls:

   1. If the Entity is tax resident in a state or jurisdiction based on its place of management, place of creation, or similar criteria, it is considered located in that state or jurisdiction;

   2. In other cases, it is considered located in the state or jurisdiction where it was created.

2. The location of an Entity that is a Flow-Through Entity is determined as follows:

   1. If the Entity is a UPE of an MNE Group or is subject to the Income Inclusion Rule (IIR), it is considered located in the state or jurisdiction where it was created.

   2. In other cases, it is treated as a Stateless Entity in any Jurisdiction.

3. The location of a PE is determined as follows:

   1. If the PE is described according to clause 1 of the fourth paragraph of Article 2 of these ERs, it is considered located in the jurisdiction where it is treated as a PE and subject to tax under an applicable Tax Treaty in force.

   2. If the PE is described according to clause 2 of the fourth paragraph of Article 2 of these ERs, it is considered located in the jurisdiction where it is subject to net basis taxation based on its business presence.

   3. If the PE is described according to clause 3 of the fourth paragraph of Article 2 of these ERs, it is considered located in the jurisdiction where it is situated.

   4. If the PE is described according to clause 4 of the fourth paragraph of Article 2 of these ERs, it is considered a stateless PE.

4. If the CE is located in more than one jurisdiction (a dual-located Entity), its location is determined as follows:

   1. If the Entity is located in the State and in another jurisdiction, and there is an applicable tax treaty in force, the Entity is considered located in the state or jurisdiction where it is deemed a resident for the purposes of that tax treaty. If the treaty requires the competent authorities to reach a mutual agreement on the deemed residence of the CE for its purposes and no agreement exists, or if the treaty does not provide relief or exemptions because the Entity is considered a tax resident in both contracting states, the provisions of the following sub-clause shall apply.

   2. If no tax treaty applies, then the location shall be determined as follows:

      1. The Entity is considered located in the state or jurisdiction where it paid the greater amount of covered taxes during the fiscal year, excluding taxes paid under the CFC Tax Regime;

      2. If the amount of covered taxes paid is equal in both states or zero, the Entity is considered located in the state or jurisdiction where it generates the greater amount of SBIE, computed on an Entity basis according to Article 43 of these ERs;

      3. if the amount of the SBIE in both jurisdictions is the same or zero, then it is considered a Stateless CE unless it is the UPE of the MNE Group in which case it shall be located in the jurisdiction where it was created.

5. SBIE is calculated separately, as if the Entity concerned were the sole CE of the MNE Group in the state or jurisdiction.

6. If the CE changes location during the Tax Period, it is considered located in the state or jurisdiction where it was present on the first day of that Tax Period.