Double Taxation Conventions Research Articles

COVID-19 and Fiscal Policies: Unnecessary and Yet Harmful: Some Critical Remarks to the OECD Note on the Impact of the COVID-19 Crisis on Tax Treaties.

The COVID-19 pandemic has restricted freedom of movement and imposed forced, or at least unplanned, displacement. Insofar as the International Tax Regime continues to be based on the physical presence of individuals, this has led to unexpected and often undesirable tax consequences. The reaction of the OECD Secretariat to this situation has been to issue a note claiming, in essence, that everything remains the same. This article critically approaches that note by exposing its general methodological flaws and analysing each of the four specific aspects to which it refers: Permanent Establishments (PEs), Place of Effective Management (POEM), Cross-Border Workers and Residence of Individuals. Double taxation conventions, COVID-19, residence, permanent establishment, agents, services-permanent establishment, place of effective management, cross-border workers, tie-breaker rules.

Residência no modelo de acordo da OCDE para evitar tributação dupla. O CDI entre Espanha e Brasil

O fenômeno da globalização é um processo imparável que desdobra seus efeitos em todas as áreas de um Estado, seja social, cultural, político e, sobretudo econômico, afetando direta ou indiretamente a ordem jurídica interna dos diferentes países que devem adaptar-se à regulação normativa de uma esfera supranacional. O direito tributário, que não é estranho à internacionalização das relações econômicas, geralmente gera problemas de dupla tributação que podem ser um freio importante no crescimento econômico de certos países, em favor daqueles com tributação mais branda. Na luta contra esse problema, é essencial determinar a residência de cada sujeito envolvido em tais relações e estabelecer os critérios para a distribuição do poder tributário entre os diferentes países envolvidos principalmente por meio dos Acordos de Dupla Tributação. Nesse sentido, a OCDE, entre outras organizações que garantem o desenvolvimento adequado do sistema mundial de comércio, prepara um modelo de acordo com base no qual muitos dos acordos bilaterais são preparados para evitar a dupla tributação entre os Estados signatários, estabelecendo o critérios para definir a residência em caso de conflito e eliminar a duplicação indesejada na carga tributária.

Literature Review: M. Castelon, International Taxation of Income from Services under Double Taxation Conventions: Development, Practice and Policy, Series on International Taxation No. 63, Kluwer Law International, 2018

Literature Review: M. Castelon, <i>International Taxation of Income from Services under Double Taxation Conventions: Development, Practice and Policy</i>, Series on International Taxation No. 63, Kluwer Law International, 2018

The influence of the tax system on the location of holding companies in Spain

Purpose The purpose of this article is to determine the influence of the tax system on the location of holding companies in Spain. Design/methodology/approach To achieve this purpose, we have used an analysis of cointegration in time series. The independent variable used was the number of holding companies under Régimen de Entidades de Tenencia de Valores Extranjeros Spanish regime. The dependent variables were divided into two groups: fiscal and non-fiscal variables. The dependent fiscal variables are effective tax rate and double taxation convention, whereas the non-fiscal dependent variables are government effectiveness and business freedom. Findings The study concludes that the fiscal variables are relevant to establish a holding company in Spain, but there are other variables such as government effectiveness and business freedom that show as well as influence on the location of holding companies. Originality/value In the year 2015, the article The influence of the tax system on the location of holding companies in Switzerland was published in the Competitiveness Review. In this article, the influence of taxation on the decision to locate a holding company in Switzerland was analyzed. Now that the Spanish holding regime is consolidated, thanks to more than twenty years of application in our tax legislation, we consider it important to carry out an analysis of the influence of taxation in the decision to locate a holding company in our country. As already mentioned in the article published in 2015, the study of the taxation of holding companies is a topic related more to law firms and/or tax advisors than to academic research, and it is for this reason that there are few empirical studies on this topic. Hence, the research developed in this paper is important.

Rethinking the Role of Arbitration in International Tax Treaties

The dispute resolution system of Double Tax Agreements (DTAs) has been a major focus for both tax authorities and researchers around the world. For several years Article 25 of the Model Tax Convention of the Organisation for Economic Co-operation and Development on Income and on Capital (‘OECD Model Tax Convention’), and Article 25 of the United Nations Model Double Taxation Convention between Developed and Developing Countries (‘UN Model Tax Convention’) had relied on a negotiation-based Mutual Agreement Procedure (MAP) as the only mechanism for the resolution of disputes arising from a tax treaty. In order to improve the function of the MAP mechanism, the OECD, in 2008, and the UN Tax Committee, in 2011, introduced a binding ad hoc arbitration clause in Article 25(5) of their respective Model Tax Conventions. However, the OECD and UN Model Tax Conventions have reserved very limited role for arbitration in resolving tax treaty disputes. After establishing that the inclusion of the current arbitration clauses in the OECD and UN Model Tax Conventions have not assuaged the tensions created by divergent interpretation or application of rules espoused in DTAs, this article examines possible techniques for improving the dispute resolution system of DTAs. Arbitration, Dispute, Double Tax Agreement, Model Tax Convention, Mutual Agreement Procedure, OECD, Taxation

A contribuição social sobre o lucro líquido e os tratados para evitar a dupla tributação - Lei n. 13.202/2015 em perspectiva

The present paper aims to analyze to which extent the objective scope of the double tax conventions signed by Brazil encompasses the social contribution on net profits. To do so, we will analyze a decision issued by the Administrative Council of Tax Appeals Council at the Administrative Proceeding n. 12897.000715/2009-41, as well as the effects of Law 13,202/2015 on the interpretation of Double Tax Conventions.

The Troubled Story of the Hungarian Advertisement Tax: How (Not) to Design a Progressive Turnover Tax

The provisions of the Hungarian Advertisement Tax stirred up many legal debates regarding the potential breach of EU law, including State aid rules and EU fundamental freedoms, respectively, as well as the violation of the non-discrimination provision of double tax conventions. The implications of these legal questions go beyond the Hungarian tax system and have special relevance on international and EU levels. This article analyses the compatibility of progressive turnover-based taxes with EU law that is of paramount importance now when Member States unilaterally introduce similarly designed digital taxes. Furthermore, the article also sheds light on the application of the non-discrimination clause of double tax conventions and the EU fundamental freedoms to procedural rules designed to enforce taxes on taxpayers who are likely not to be physically present in the taxing jurisdiction. Turnover taxation, digital tax, progressive tax rate structure, advertisement tax, tax treaty non-discrimination, state aid, registration requirement and default penalty, EU fundamental freedoms.

The Single Tax Principle: Fiction or Reality in a Non-Comprehensive International Tax Regime?

It is possible to talk about an international tax regime taking into account the international regime theory developed in the framework of international relations. As this is defined as a set of rules and principles that regulate the international tax arena, this contribution analyses if the single tax principle can inspire such an international tax realm. The author explores the roots and developments of the single tax principle and focuses on the purposes of double tax conventions in order to determine whether single taxation is actually a desired outcome of tax treaties. The author also tackles international custom and arrives at the conclusion that the international tax regime does not rise to the level of customary international law. In this regard, the international tax regime is based on competition rather than on coordination, being regarded as a non-comprehensive regime. The question that arises, then, is whether single taxation can act as a coordination mechanism to turn the international tax regime into a comprehensive one.

METHODS OF PREVENTING DOUBLE TAXATION IN THE AREA OF PERSONAL INCOME TAXATION INCLUDING THE RULES OF FREE MOVEMENT OF WORKERS

In European Union countries, income from hired labor is taxed in the country in which the work is done. Regardless of this, taxpayers who are subject to unlimited tax liability in Poland are obliged to settle this income also in Poland. To avoid double taxation of the same income, double taxation conventions are concluded between countries. They provide for two methods of avoiding double taxation: the exclusion method with progression and the method of proportional deduction (credit, tax credit). Certain double taxation conven-tions concluded by Poland, exempt from taxation in Poland the income from hired work performed in another country (taxed in the country in which the work was performed). These incomes are taken into account in the annual settlement submitted in Poland only when the taxpayer also achieved income subject to taxation in Poland on general principles. Income from work abroad, exempted from taxation under a bilateral agreement, is then used to determine the interest rate, which will then be applied to the taxation of income in Poland.

Avoiding Double Taxation Through The Assessment of International Tax Treties. Case: ESP’s versus Anaf Braşov

Abstract International double taxation represents one of the main problems’ for which taxpayers have to deal within a world fulfilled with globalization, uncertainty, risk, asymmetrical information and moral hazard. In this sense, in this article it is provided a qualitative overview regarding the appearance and evolution of the main double taxation conventions and their legal framework. In this article it is tackled some important issues, namely: the rationale behind the construction and engaging in double taxation conventions; the need for a coherent and just application of those conventions; the historical appearance and evolution of the double taxation conventions, as well as the quid pro quo OECD Model Convention and UN Model Convention. The conclusions of this article highlight the importance and ultimately need for construction of best practices new and complex multilateral tax convention at the UE level in order to diminish the contagious effects of the treaty shopping practices. The case study presented in this article from the Romanian jurisprudence highlights the multi-faced concept of double taxation and the comprehension approach which must be undertaken in order to solve the complex issues of the international taxation via double taxation treaties.

Tax measures to combat brain drain: (In) compatibility issues with double tax conventions and a potential way forward

This article analyzes the interaction between domestic tax legislation applied to avoid or combat a brain drain and the OECD and the UN model tax conventions, the two main models used by states in tax treaty negotiations. After it is demonstrated that brain drain taxes are incompatible with the current tax treaty network, the author presents alternatives that could be included in the model tax conventions, and consequently in tax treaties, to establish the compatibility of the measures, as well as a justification for the adoption of these alternatives in tax treaties involving developing countries.

The New Tie-Breaker-Rule for Companies According BEPS Action Point 6: A (Too) Radical Change?

This article investigates whether the general introduction of a Mutual Agreement Procedure under Article 4 section 3 OECD Model through BEPS Action Point 6 is more capable of effectively and practically breaking the tie for dual resident companies than the former place of effective management criterion. Based on an empirical analysis of the tie-breaker-rule in treaty practice in more than 2,000 Double Tax Conventions concluded by the OECD Member and Partner States it is demonstrated that the place of effective management criterion is still predominant in treaty practice and that the application of a Mutual Agreement Procedure under Article 4 section 3 OECD Model only slightly increased following the MLI implementation process. Furthermore, it is shown that the cautious implementation of the new tie-breaker-rule can be explained due to various procedural shortcomings of the Mutual Agreement Procedure with respect to the core requirements that Article 4 section 3 OECD Model has to fulfil. Based on the empirical and theoretical assessment further suggestions for improvements to enhance the application of both, the MAP and place of effective management criterion, on a standalone basis, are provided. A combined application of both tie-breaker-rules within a two-step hierarchical test is presented as the preferred solution.

Double Taxation Conventions in the Case Law of the CJEU

This Essay analyzes the jurisdiction of the CJEU regarding the interpretation of Double Taxation Conventions, by examining the relevant case law of the CJEU. It further investigates the interplay between the Fundamental Freedoms and the Double Tax Conventions.

Interplay Between the Principal Purpose Test in the Multilateral BEPS Convention and the Beneficial Ownership Clause as Treaty Anti-Avoidance Tool Targeting Holding Structures

The signing of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI), has enabled the participant jurisdictions to begin the process of implementing certain treaty-based Base Erosion and Profit Shifting (BEPS) recommendations into their network of double tax conventions. In line with Action 6 of the BEPS Plan, as per Article 7 of the MLI, a minimum anti-abuse standard provision to counter treaty shopping was introduced. This article discusses the outcomes deriving from the application of the Principal Purpose Test (PPT), as default provision, and its possible interplay with the treaty anti-avoidance tool presented by the clause of the beneficial owner for tax treaty purposes. The analysis is supported by practical guidelines issued to holding companies, based on recent case law.

Case C-648/15 Austria v. Germany: Jurisdiction and Powers of the CJ to Settle Tax Treaty Disputes Under Article 273 TFEU Article

On 12 September 2017, the Court of Justice ruled in Case C-648/15 Austria v. Germany on the interpretation and application of the double taxation convention between Austria and Germany on the basis of Article 273 TFEU; a provision which allows the Member States to submit to the Court of Justice (CJ) a dispute between them concerning a matter related to the EU Treaties. In this contribution, the authors focus on some selected (EU law) aspects of the judgment of the CJ under Article 273 TFEU, i.e. (1) the scope of the CJ’s jurisdiction under Article 273 TFEU, (2) the effects of a CJ ruling under such provision as regards the Member States and within the EU as a whole, (3) the application of the rules of interpretation proper to international law (i.e. the Vienna Convention on the Law of Treaties) by the CJ in the context of an Article 273 TFEU-based procedure and (4) issues of overlap with the recently adopted Directive on Tax Dispute Resolution Mechanisms in the European Union.

Double taxation conventions in Romania Case: DSSs Râşnov vs. ANAf braşov

Abstract Conventions to avoid double taxation are the panacea of tax law, lato sensu, and direct taxation, stricto sensu. Although the current network of double taxation conventions has over 2500 tax treaties concluded by the world’s states, there are still issues that need to be addressed in their application: the anti-abuse provisions to be found in conventions, the practices of the type treaty shopping, LOB clauses, use of arbitration in the application of double taxation avoidance conventions. The case of Romania is analyzed in this article, through the DSSs Râşnov cause vs. ANAF Brasov, in order to highlight the way in which the framework of the double taxation avoidance convention is applied in Romania, if there are differences and divergences between the de jure provisions of the double taxation avoidance conventions and the de facto application, in practice, a state like Romania, which is in the process of catching up with economies in developed countries. The case presented in this article suggests that there is still room for maneuver to improve the framework for double taxation avoidance conventions in Romania and how they are applied in practice, which their provisions are interpreted and respected.

European Double Taxation and Human Rights in a Globalised World

“A right is not what someone gives you; it's what no one can take from you.” Ramsey Clark The ECHR is an international convention designed to protect taxpayers, in much the same way as a double taxation convention. A good example of the overlap is the non-discrimination provisions found in both double taxation conventions and human rights treaties. The models, on the basis of which the vast majority of double taxation conventions have been negotiated, predate the main progress in human rights law. It is a suitable point to open a discussion of the extent to which double taxation conventions might give rise to issues of compatibility with human rights norms, or whether changes might be made to the model conventions to ensure better conformity with those norms. The aim of this study is to elaborate the conceptual links between double taxation agreements and human rights and to demonstrate this with the example of the Council of Europe State Parties and their fiscal policy commitment to human rights obligations with a focus on European double taxation treaties. Thus, this contribution discusses and suggests means improve systematic protection of human rights from double taxation with a focus on the European context. The research considers certain issues relating to the compatibility of double taxation conventions with human rights conventions.

GAARs and Treaties: From the Guiding Principle to the Principal Purpose Test. What Have We Gained from BEPS Action 6?

The issue of General Anti-Avoidance Rules (GAARs) and treaties is a legal problem as old as double tax conventions themselves. However, the Base Erosion and Profit Shifting (BEPS) Project, materialized in fifteen Actions and particularly in the Final Report of BEPS Action 6, involves a radical change in the very physiognomy of the problem. Apart from the inclusion of a Limitation-on-benefits rule in the OECD Model, the most groundbreaking innovation arising from BEPS Action 6 would be the incorporation, also to the Model, of a GAAR (the Principal Purpose Test). This article will examine the pros and cons of the Principal Purpose Testvis á vis the old paradigm. It also seeks to analyse some new problems originating from the very existence of the PPT.

Beneficial Ownership and Derivatives: Has the Swiss Federal Supreme Court Decision in the SMI Futures Case Put an End to ‘Cash-Futures Arbitrage’?

The Swiss Federal Supreme Court recently decided a second case dealing with the question of beneficial ownership of dividends. The dividends were economically passed on to third parties in transactions involving cross-border derivatives. In the SMI Futures Case, the court denied a Danish bank a refund of dividend withholding taxes under Article 10 of the Switzerland/Denmark Double Taxation Convention (1973) as it did not regard the Danish bank as the beneficial owner of the dividends. The Danish bank was the legal owner and physical holder of equity baskets comprising the twenty largest Swiss equities, which form the Swiss Market Index (SMI). The Danish bank was also the direct recipient of the dividends from these shares. The equity baskets were hedged with SMI futures. The Federal Supreme Court suggested that the Danish bank failed in its obligation to provide information and cooperate with the tax authorities. The resulting lack of information on the facts of the transactions could not be remedied. The court maintained that the Danish bank passed the dividends on by way of non-market standard purchase and disposal prices of the Swiss shares. It regarded the interposition of a broker acting as a principal in the share purchase and sale as an indicator of the circularity of the whole transaction. It further suggested that the Danish bank transferred all market risks in the transactions to its parent company and to third-party counterparty banks. The court concluded that there was an interdependence between obtaining the dividends and passing them on to the Swedish parent company and/or other counterparty banks. After a critical analysis of the case, the article illustrates various examples of cash-futures arbitrage transactions (equities versus futures) with slight economic differences between the various forms of cash-futures arbitrage but potentially different taxation results. Beneficial ownership of the dividends may only be attributed to the physical holder (and legal owner) of the shares and direct recipient of the dividends in those cash-futures arbitrage transactions which are traded anonymously on exchange. Based on the decision of the Swiss Federal Supreme Court, beneficial ownership could be denied to the legal owner and physical holder of the shares (and direct recipient of the dividends) in cases where transactions are executed either over-the-counter (OTC) or as OTC-style block crosses on exchange.

Independent Personal Services in the Brazilian Double Tax Conventions

Independent Personal Services in the Brazilian Double Tax Conventions