Document ID: chunk:federal_register_of_legislation:C2004A00987:schedule:2a:p11
Version: federal_register_of_legislation:C2004A00987
Segment Type: schedule
Provision Reference: sch 2A (pt 11/14)
Character Range: 78903–81757

State of residence a substantial portion of the overall supervision and administration of a group of companies (which may be part of a larger group of companies), which may include, but cannot be principally, group financing;
        (ii)          the group of companies consists of corporations resident in, and engaged in an active business in, at least five countries (or groupings of countries), and the business activities carried on in each of the five countries (or groupings of countries) generate at least 10 percent of the gross income of the group;
        (iii)        the business activities carried on in any one country other than the Contracting State of residence of the headquarters company generate less than 50 percent of the gross income of the group;
        (iv)         no more than 25 percent of its gross income is derived from the other Contracting State;
        (v)           it has, and exercises, independent discretionary authority to carry out the functions referred to in sub‑paragraph (i);
        (vi)         it is subject to generally applicable rules of taxation in its country of residence; and
        (vii)      the income derived in the other Contracting State either is derived in connection with, or is incidental to, the active business referred to in sub‑paragraph (ii).
    If the income requirements for being considered a recognized headquarters company (sub‑paragraphs (ii), (iii), or (iv)) are not fulfilled, they will be deemed to be fulfilled if the required percentages are met when averaging the gross income of the preceding four years.
    (3) (a) A resident of one of the Contracting States will be entitled to the benefits of the Convention with respect to an item of income derived from the other State, regardless of whether the resident is a qualified person, if the resident is engaged in the active conduct of a trade or business in the first‑mentioned State (other than the business of making or managing investments for the resident's own account, unless these activities are banking, insurance or securities activities carried on by a bank, insurance company or a registered, licensed or authorized securities dealer), and the income derived from the other Contracting State is derived in connection with, or is incidental to, that trade or business.
    (b) If the resident or any of its associated enterprises carries on a trade or business activity in the other Contracting State which gives rise to an item of income, sub‑paragraph (a) of this paragraph shall apply to such item only if the trade or business activity in the first‑mentioned State is substantial in relation to the trade or business activity in the other State. Whether a trade or business activity is substantial for purposes of this paragraph will be determined based on all the facts and circumstances.
    (c) In