Fixed Place of Business & Location

A "fixed" place of business in terms of geographical location in Venezuela

The Partnership ruling11 mentioned above also establishes some important guidelines with respect to the notion of what constitutes a "fixed" place of business for purposes of the PE definition. Although it does not expressly state so, the wording of the ruling is a clear indication that SENIAT followed the explanation of the OECD commentary, since the rationale is identical to paragraph 2 of the OECD commentary on article 5 by stating that in order for the fixed test to be met the place of business must be established at a distinct place with a certain degree of permanence.

With this language the ruling has recognized that the place of business must be fixed in terms of geographical location. However, no further details were provided as to what can be considered as a distinct geographical location. In the reporters' view the examples provided in the OECD commentary will be particularly helpful in determining when this test is met, especially those examples related to the notions that: (a) there has to be a link between the place of business and a specific geographical point; (b) the place of business does not have to be actually fixed to the soil; and (c) a fixed place of business will generally be considered to exist where a particular area within which the activities are moved may be identified as constituting a coherent whole commercially and geographically with respect to that business.