Under OECD model, a construction project lasting more than how many months is considered a permanent establishment?

Under OECD model, a construction project lasting more than how many months is considered a permanent establishment?

• A. 6 months
• B. 24 months
• C. 18 months
• D. 12 months

Answer: (D)

The key point is the duration threshold for construction projects under the OECD model. A building site or construction project becomes a permanent establishment if it lasts longer than 12 months. This 12-month cutoff is used to distinguish temporary, project-based activity from a place where the enterprise regularly carries on business through a fixed base in the host country. So, when a project extends beyond 12 months, it is treated as creating a PE; if it lasts 12 months or less, it generally does not. This is why the correct threshold is 12 months.

The key point is the duration threshold for construction projects under the OECD model. A building site or construction project becomes a permanent establishment if it lasts longer than 12 months. This 12-month cutoff is used to distinguish temporary, project-based activity from a place where the enterprise regularly carries on business through a fixed base in the host country. So, when a project extends beyond 12 months, it is treated as creating a PE; if it lasts 12 months or less, it generally does not. This is why the correct threshold is 12 months.