26

carries on a trade or business as aforesaid, tax may be imposed on those profits
by Norway, but only on so much of them as is attributable to that permanent
establishment.
 (2) The industrial or commercial profits of a Norwegian enterprise shall not
be subject to United Kingdom tax unless the enterprise carries on a trade or
business in the United Kingdom through a permanent establishment situated
therein. If it carries on a trade or business as aforesaid; tax may be imposed on
those profits by the United Kingdom, but only on so much of them as is
attributable to that permanent establishment.
 (3) When an enterprise of one of the territories carries on a trade or business
in the other territory through a permanent establishment situated therein, there
shall be attributed to that permanent establishment the industrial or commercial
profits which it might be expected to derive in that other territory if it were an
independent enterprise engaged in the same or similar activities under the same
or similar conditions and dealing at arm's length with the enterprise of which
it is a permanent establishment.
 (4) Where an enterprise of one of the. territories derives profits, under con-
 tracts concluded in that territory, from sales of goods or merchandise stocked in a
 warehouse in the other territory for convenience of delivery and not for purposes
 of display, those profits shall not be attributed to a permanent establishment of
 the enterprise in that other territory, notwithstanding that the offers of purchase
 have been obtained by an agent in that other territory and transmitted by him
 to the enterprise for acceptance.
 (5) No portion of any profits arising to an enterprise of one of the territories
 shall be attributed to a permanent establishment situated in the other territory
 by reason of the mere purchase of goods or merchandise within that other terri-
 tory by the enterprise.


 ARTICLE IV.
 Where-
 (a) an enterprise of one of the territories participates directly or indirectly
 in the management, control or capital of an enterprise of the other
 territory, or
 (b) the same persons participate directly or indirectly in the management,
 control or capital of an enterprise of one of the territories and an enter-
 prise of the other territory,
 and, in either case, conditions are made or imposed between the two enterprises,
 in their commercial or financial relations, which differ from those which would
 be made between independent enterprises, then any profits which would but for
 those conditions have accrued to one of the enterprises but by reason of those
 conditions have not so accrued may be included in the profits of that enterprise
 and taxed accordingly. ,


 ARTICLE V.
 Notwithstanding the provisions of Articles III and IV, profits which a resident
 of one of the territories derives from operating ships or aircraft shall be exempt
 from tax in the other territory.