Artikel IV

1. It is understood that in the case of a contract performed by an enterprise of a Contracting State partially through a permanent establishment in the other Contracting State, and partially outside that other State, the Contracting State in which the permanent establishment is situated shall not have the right to tax all of the income derived in connection with the performance of the contract, but shall be required to allocate both income and deductions, pursuant to paragraphs 2 and 3 of Article 7, as if the head office and the permanent establishment of the enterprise were operated as independent entities.
It is further understood that in determining the proper allocation of income, due regard shall be had to the role played and activities performed by the permanent establishment on the one hand, and the role played and the activities performed by the enterprise outside of the country in which the permanent establishment is situated, on the other hand. Income properly allocable to such other activities shall not be taxable in the Contracting State in which the permanent establishment is situated.
It is further understood that the foregoing may be applied in the case of contracts for the survey, supply, installation or construction of industrial, commercial or scientific equipment, premises or public works.
2. In respect of paragraph 1 of Article 7, profits derived from the sale of goods or merchandise of the same or similar kind as those sold, or from other business activities of the same or similar kind as those effected, through a permanent establishment, may be considered attributable to that permanent establishment, provided that it is proved that the transaction concerned has been resorted to in order to avoid taxation in the Contracting State where the permanent establishment is situated.