Under OECD rules, a construction project lasting more than 12 months is considered a permanent establishment.

Under OECD rules, a construction project lasting more than 12 months is considered a permanent establishment.

• A. False
• B. It depends on jurisdiction
• C. Not defined
• D. True

Answer: (D)

Under the OECD Model Tax Convention, a building site or construction/installations project creates a permanent establishment if it lasts more than 12 months. This 12-month threshold is specified for construction activities, so a project that extends beyond that period is treated as a PE, meaning the profits attributable to that site can be taxed in the host country. If the project ends within 12 months, it typically does not create a PE from the construction activity alone (though other PE rules, like dependent-agent PE, could still apply in different circumstances). Therefore, the statement is true: a construction project lasting more than 12 months is considered a permanent establishment.

Under the OECD Model Tax Convention, a building site or construction/installations project creates a permanent establishment if it lasts more than 12 months. This 12-month threshold is specified for construction activities, so a project that extends beyond that period is treated as a PE, meaning the profits attributable to that site can be taxed in the host country. If the project ends within 12 months, it typically does not create a PE from the construction activity alone (though other PE rules, like dependent-agent PE, could still apply in different circumstances). Therefore, the statement is true: a construction project lasting more than 12 months is considered a permanent establishment.