50 of the 1,000 employees of USco (a US C-Corp and a “qualifying person” for purposes of the Canada-US Treaty) are Canadian residents who are allowed, but not required, to work from home for two or three days a week. After discussing the limited circumstances in which USco might be considered to be carrying on business by virtue of the Canadian home office activities of its employees, CRA then addressed whether any such business would be carried on through a permanent establishment in Canada, and stated:
In most situations, the home office of the employee will not constitute a fixed place of business through which the business of USco is partly or wholly carried on. That might be the case if USco has ready access to the employee’s premises, pays rent for the use of those premises or if there is evidence of an intention to establish the workspace in Canada as an office of USCo that is at USco’s disposal.
Regarding the application of Art. V(5), CRA stated:
Remotely working employees may create an “agency” permanent establishment in Canada if they routinely enter into contracts in Canada on behalf of USco. In that respect, the extent of the contracting authority granted to Canadian resident employees may be relevant. For example, if a contract entered into by a Canadian employee requires approval by the U.S. office to be binding, such contract would not necessarily be viewed as entered into in Canada, provided the approval by the U.S. office is not merely a formality.
Regarding Art. V(9), it stated:
USco may be deemed under Article V(9) of the Treaty to be providing services in Canada through a permanent establishment if Canadian resident employees working from their home in Canada are providing those services for an aggregate of at least 183 days in any 12 months period in respect of a single project, or connected group of projects for Canadian customers (this could include a non-resident that maintains a PE in Canada where the services are provided in respect of that permanent establishment).