Treaty Shopping PDF

Enter the characters you see below Sorry, we just need to make sure you’re not a robot. The provisions and goals vary significantly, with very few tax treaties being alike. The stated goals for entering into a treaty often include reduction of double taxation, eliminating tax evasion, and treaty Shopping PDF cross-border trade efficiency. It is generally accepted that tax treaties improve certainty for taxpayers and tax authorities in their international dealings.


Författare: Stefan Renger.
Die neue Rechtsprechung des Bundesfinanzhofes zur Nutzung von Doppelbesteuerungsabkommen auch ohne ausländischen Geschäftsbetrieb hat zu erheblichen Irritationen geführt. Sie eröffnet neue Wege, die von der Finanzverwaltung bislang kategorisch abgelehnt werden. Der Autor erläutert die gesamte Rechtslage zu diesem Komplex im Zusammenhang und setzt sich mit den Auswirkungen sowohl für die Verwaltung, aber auch für die Unternehmen auseinander.

Several governments and organizations use model treaties as starting points. Double taxation treaties generally follow the OECD Model Convention and the official commentary and member comments thereon serve as a guidance as to interpretation by each member country. In general, the benefits of tax treaties are available only to tax residents of one of the treaty countries. In most cases, a tax resident of a country is any person that is subject to tax under the domestic laws of that country by reason of domicile, residence, place of incorporation, or similar criteria.

Generally, individuals are considered resident under a tax treaty and subject to taxation where they maintain their primary place of abode. However, residence for treaty purposes extends well beyond the narrow scope of primary place of abode. For example, many countries also treat persons spending more than a fixed number of days in the country as residents. Entities may be considered resident based on their country of seat of management, their country of organization, or other factors. The criteria are often specified in a treaty, which may enhance or override local law.

It is possible under most treaties for an entity to be resident in both countries, particularly where a treaty is between two countries that use different standards for residence under their domestic law. While in general tax treaties do not specify a period of time for which business activities must be conducted through a location before it gives rise to a PE, most OECD member countries do not find a PE in cases in which a place of business exists for less than six months, absent special circumstances. Even where a resident of one country does not conduct its business activities in another country through a fixed place or business, a PE may still be found to exist in that other country where the business is carried out through a person in that other country that has the authority to conclude contracts on behalf of the resident of the first country. Many tax systems provide for collection of tax from non-residents by requiring payers of certain types of income to withhold tax from the payment and remit it to the tax authorities. Withholding arrangements may apply to interest, dividends, royalties, and payments for technical assistance. Most tax treaties reduce or eliminate the amount of tax required to be withheld with respect to residents of a treaty country.

Most treaties provide mechanisms eliminating taxation of residents of one country by the other country where the amount or duration of performance of services is minimal but also taxing the income in the country performed where it is not minimal. Most treaties also provide special provisions for entertainers and athletes of one country having income in the other country, though such provisions vary highly. Most treaties eliminate from taxation income of certain diplomatic personnel. Most tax treaties also provide that certain entities exempt from tax in one country are also exempt from tax in the other. Entities typically exempt include charities, pension trusts, and government owned entities.

Many treaties provide for other exemptions from taxation that one or both countries as considered relevant under their governmental or economic system. Tax treaties usually specify the same maximum rate of tax that may be imposed on some types of income. However, local law in some cases may provide a lower rate of tax irrespective of the treaty. In such cases, the lower local law rate prevails. Generally, income taxes and inheritance taxes are addressed in separate treaties.

Inheritance tax treaties often cover estate and gift taxes. Generally fiscal domicile under such treaties is defined by reference to domicile as opposed to tax residence. Nearly all tax treaties provide a specific mechanism for eliminating it, but the risk of double taxation is still potentially present. This mechanism usually requires that each country grant a credit for the taxes of the other country to reduce the taxes of a resident of the country. Taxpayers may relocate themselves and their assets to avoid paying taxes. Some treaties thus require each treaty country to assist the other in collection of taxes, to counter the revenue rule, and other enforcement of their tax rules.