Article 5 (6) of a Treaty- Agent of Independent Status
üA person is regarded as an agent of independent status if he is legally and economically independent of the foreign principal
üOrdinarily an independent agent does not constitute a PE if he acts in the ordinary course of his business while acting for his principal
Key terms
oLegal independence - Agent is not subject to significant control/ instruction by or not in the course of seeking approval from the principal, with respect to manner in which work is carried out
oEconomic independence - Agent bears “entrepreneurial risk” associated with his business operations and receives reward through the use of his entrepreneurial skills and knowledge
oThe Dependency which is determined by consideration of the extent to which the agent exercises freedom in the conduct of business on behalf of the principal
oOrdinary course - As commonly understood by relevant industry. The concerned business activities customarily carried out within the agent’s trade as a broker, commission agent or other independent agent
(Source: Collected and Edited)
