Abstract
The transfer of intellectual property from a higher-tax country where R&D takes place to a lower-tax country facilitates the phenomenon denominated “base erosion and profit shifting” (BEPS) and this generates a flow of the remuneration of intangibles from high-tax countries to low-tax countries. These remunerations are defined as “royalties”, but they can assume different legal forms and denomination. These crossborder flows of royalties are regulated by a host of bilateral tax treaties between OECD and non-OECD. These treaties generally follow the OECD Model, but also a UN Model exist, while certain countries, such as the U.S., adopt their own model (which does not differ dramatically from the OECD Model). In this Article the provisions of the OECD Model are used as a proxy for the provisions of the numerous existing treaties. The paper analyzes payments that are not royalties, but business profits in so far they are generated in business-to-business transaction, as well the characterization of payments for know-how in different areas. Attention is also devoted to payments for computer software, by looking at the software-related payments that are royalties because they imply the use of the intangibles, but also at the software-related payments that are business profits because of the underlying contractual configuration. Finally the paper focuses on payments for mixed contracts which may have an hybrid legal and tax characterization.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.