Hostco owned Canadian real estate that it used to host crypto-mining equipment owned (or leased) by a UK company (UKco). In addition to hosting the equipment, Hostco provided security, electricity, internet access and maintenance/management services to ensure the proper operation of the equipment. UKco employees located exclusively in the U.K. could direct the use of the mining equipment remotely through the use of software, but could not physically alter it.
CRA noted that, in the case of a services businesses, Folio S5-F2-C1 places weight on the place where the services are actually performed in determining where the business is carried on, and that specific CRA positions indicate that the crypto-miner receiving cryptocurrency for validating a blockchain is viewed as providing a service. Here, as the service was provided by the mining equipment, the location of the equipment was a significant factor.
Here the relevant factors seemed to suggest that the business was being carried on in Canada through a permanent establishment, and that it was carried on wholly or predominantly through operating the crypto-mining equipment, which was at the non-resident’s disposal and was situate in Canada.