Applying the AOA to a PE That Performs Services: A Case Study on the Balance Sheet and the Profit and Loss Account of the Branch

The present contribution contains an outline of the key (tax and accounting) considerations that come into play while applying the AOA to a permanent establishment performing services. The article highlights the importance of keeping an accurate and detailed documentation of transactions having occurred among distinct parts of the same enterprise for the purpose of accurately delineating the functional profile of each of these parts and being able to demonstrate that an arm’s length amount of profits has been attributed to a branch performing services.