Tax Residence Research Articles

Międzynarodowe opodatkowanie emerytur — ujęcie modelowe

International taxation of pensions — a model conceptAlong with the changing demographic structure of many countries, especially developed ones, one of the significant social groups are people who receive benefits from old-age security. One aspect of this phenomenon is the issue of taxation of financial benefits received by pensioners in cross-border situ­ations, in particular when during retirement pensions are paid out of afund located in the territory of a different country from the one in which the beneficiary resides tax residence. The taxpayer’s right to tax such pensions is subject to negotiations between states that intend to conclude adouble tax treaty, in which they will allocate tax power in this matter. These agreements are modeled on model conventions developed by the OECD and the UN. The purpose of this article is to analyze the legal, economic and administrative aspects resulting from modeled in the model conventions ways of allocating tax rights between the source of pension payment and the residential country of such a benefit.

The Myth of Corporate Tax Residence

The issue of corporate residence has recently attracted a great deal of attention in both the popular press and in academic discourse, primarily because of the phenomenon of corporate inversions. The consensus among commentators is that the root of the problem is a flawed definition of corporate residence, and they have therefore proposed replacing the current definition, which relies upon place of incorporation, with another that relies upon control and management, home office, customer base, source of income, or the residence of shareholders. The thesis of this article is that the concept of tax residence is inapplicable to corporations. Residence in tax law delineates the boundaries of distributive justice, and whereas corporations cannot be parties to a scheme of distributive justice, corporate residence is a misnomer. The incongruity of corporate residence along with the fact that residence is a fundamental concept in international taxation is one reason that the current international tax regime has proven unviable. The article then goes on to describe in broad outline an international corporate tax regime that avoids the problem of corporate residence by focusing on shareholders instead of on corporations.

New Italian tax regime for high-net-worth individuals: Italy as the new attractive destination

This article analyses the new special tax regime for high-net-worth individuals, pursuant to which non-resident individuals transferring their tax residence to Italy can opt to pay a lump sum substitute tax of EUR 100,000 per year, in lieu of ordinary taxation, on all of their non-Italian sourced income. Such preferential regime is a withdrawal from the traditional worldwide taxation and unlimited tax liability. Trusts and other interposed structures will benefit from the same rules applicable to qualifying high-net-worth individuals.

Residencia Fiscal De Los Nacionales Colombianos Con Presencia En México O Argentina

El artículo presenta el impacto tributario de colombianos con presencia en México o Argentina, identifica los efectos de la renta mundial para residentes fiscales en Colombia, tanto nacionales como extranjeros que se encuentran dentro y fuera del país realizando actividades económicas; podemos ver el impacto como es el caso del convenio para evitar la doble tributación firmado con México, que tiene como propósito desgravar las rentas percibidas en este país y sobre las cuales no pagará impuestos en Colombia. Pero encontraremos en desventaja al colombiano con presencia en Argentina, toda vez que no se cuenta con un convenio para evitar la doble tributación y deberá cancelar el diferencial de la tarifa de impuesto en Colombia, si el resultado genera que la tarifa impositiva de Argentina es menor a la determinada después de depurar la renta mundial.

New York’s Unconstitutional Tax Residence Rule

In 1998 New York’s highest court upheld a dormant commerce clause challenge to the state’s statutory tax residence rule in Tamagni. This article argues that that case is no longer good law in light of the Supreme Court’s 2015 decision in Wynne because it is internally inconsistent and economically equivalent to a tariff.

Corporate Tax Residence and Mobility, Germany - Extended Version of the National Report for the 2017 Annual Conference of the European Association of Tax Law Professors (EATLP)

The paper examines Corporate Tax Residence and Mobility in a German domestic and an international (cross-border) context. It follows the structure of the 2017 EATLP questionnaire. The extended version of the report covers recent developments in German civil and corporate law, international private law and other non-tax areas in more detail and delivers full references.

India and Its Tryst with Subjective Rules: An Analysis of the Recent Place of Effective Management Guidance

This article examines India’s recent introduction of the subjective place of effective management test to determine Indian tax residence. The author provides an overview of international corporate tax residence rules, and Indian corporate tax residence rules before and after the adoption of the place of effective management test. The article addresses the Indian Central Board of Direct Taxes’ January 2017 Circular, which is intended to elucidate application of the place of effective management test in India, and critiques its effectiveness in providing clarity and certainty to taxpayers. [Ed. Note that this article was finalized for publication before the OECD released the reservation and notification statement for India to the Multilateral Convention (2016) on 7 June 2017.]

Effective international information exchange as a key element of modern tax systems: promises and pitfalls of the OECD’s common reporting standard

Today’s global economic environment is characterized by the high mobility of capital and labour across national borders. Against the backdrop of a legal framework governing taxation of cross-border income, this may lead to double taxation on the one hand, as well as provide opportunities for tax evasion and tax avoidance on the other. It is well-established that a prerequisite for effective taxation of foreign- sourced income earned by “domestic taxpayers” (i.e. tax residents) is the system of administrative co-operation across national boundaries, mainly in the form of exchange of tax-relevant information between tax authorities. Since the lack of information- exchange mechanisms is linked with tax havens and the proliferation of “harmful tax practices”, the OECD put the issue high on the global political agenda as early as 1998. Further developments strengthened the importance of the exchange of information, leading to the so-called “big bang” of 2009, i.e. to a significant increase in the number of concluded tax information exchange agreements, caused by the growing concern about international tax evasion and avoidance in the post-crisis period. Nowadays the so-called automatic exchange of information (AEOI) between tax authorities has emerged as a new global standard. This is mostly due to the development of specific national and international models, aimed at enhancing intergovernmental cooperation in fighting offshore tax evasion. In this regard special attention should be drawn to the 2014 release of the OECD’s Common Reporting Standard (CRS), which is based on the idea that banks and other financial institutions should play a crucial role in providing information on taxpayer’s income and assets to tax authorities around the globe. The aim of this paper is to explore some of the most important implications of the adoption of the CRS as a global AEOI model. While there are marked advantages of the new standard – mainly related to its potential in curbing large-scale offshore tax evasion – some important concerns arise as to its implementation on a global level. Particular attention will be paid to the issue of coordination of the CRS with the other information exchange models (e.g. FATCA) and to the problem of protecting taxpayers’ rights and information.

Italian Tax Authorities Action Against Fictitious Corporate Tax Residence

Fictitious corporate tax residence is a primary concern for States, in view of the fact that it impacts – directly and incisively – on States’ taxing rights, and also since it is known to trigger double taxation as well as double non-taxation phenomena. Based on the above, it is quite evident that to counter such phenomena, a coordinated approach at international level is altogether imperative, especially since regulation of tax aspects has been playing an increasingly central role in debates and discussions between and among Tax Authorities, and international institutions.

New Italian Tax Regime to Attract High Net Worth Individuals

This note discusses the new special tax regime for high net worth individuals, pursuant to which non-resident individuals transferring their tax residence to Italy can opt to pay a lump-sum substitute tax of EUR 100,000 per year, in lieu of ordinary taxation, on all of their non-Italian-sourced income.

Specific features of taxation of in-dividuals in relationships with foreign elements.

УДК 347.9В статье рассмотрены проблемы налогообложения физических лиц – нерезидентов в российском налоговом праве. Освещены проблемы реализации принципа запрета дискриминации в российском налоговом праве. Показана важная роль судебной практики в развитии механизмов налогообложения нерезидентов.

Taxation Awareness and its Impact on Financial Literacy

For Russia to become a socially oriented country its population should be kept well informed about the current tax legislation. The article discusses the concept of tax awareness and its relation to the concept of tax culture. The author describes the measures necessary to raise tax awareness in the Russian society, which involves increasing the population’s knowledge about tax legislation and identifying the factors preventing people from paying their taxes on time and in full. Raising tax awareness is also linked to enhancement of financial literacy among various age and gender groups with different tax status. Conceptually, this research is based on the attribution theory, planned behaviour theory and the social learning theory. The author sought to prove the hypothesis that the state is not interested in increasing the population’s tax literacy, which is one of the main components of financial literacy, because the government is incapable of answering the questions: how can citizens exercise their right to free education, free health care and social benefits, and who is actually entitled to these services and benefits? Methodologically, the research included a survey of heterogeneous social groups with different age, gender, social and tax status: young people, students, employed population, retirees, tax residents and foreign nationals. The article outlines measures that can keep people informed about tax legislation. Respondents were asked to rank these measures on a scale of one to five according to their importance. The article also describes the factors preventing law abiding citizens from paying taxes to budgets of different levels. These are the factors that tax authorities and the Ministry of Finance should be dealing with in the first place. Highlights The taxpayers should not be forced or bullied into performing their duties but instead they should be treated by the state as equal partners Tax authorities should conduct a well-organized campaign promoting responsible taxpaying and explaining why it is important It is shown that tax awareness of the population depends on people’s tax mentality and tax morality, which constitute tax culture For citation Koretskaya-Garmash V. A. Taxation Awareness and its Impact on Financial Literacy. Journal of Tax Reform, 2017, vol. 3, no. 2, pp. 131–142. DOI: 10.15826/jtr.2017.3.2.036 Article info Received May 7, 2017; accepted June 20, 2017

Conflict of different criteria for determining the tax residence of legal persons

Taking OECD Model Convention and the Commentary to the OECD Model Convention as an example the article considers criteria for determining tax residency of legal persons and approaches to situations of double tax residency. The author examines the features of two main approaches to the problem and reveals their features: the place of effective management and control and mutual agreement procedure.

Report on the 2016 Conference Tax Treaty Case Law Around the Globe

Each year the international conference Tax Treaty Case Law Around the Globe provides a forum to discuss with outstanding experts of the relevant jurisdictions the most important and interesting tax treaty cases which recently have been decided all over the world. This article provides a report on the 2016 Tax Treaty Case Law Around the Globe conference held in the Netherlands at Tilburg University on 19–21 May 2016 and which covered seven main topic clusters: (1) Scope, tax treaty interpretation and residence; (2) Permanent establishment (PE); (3) Business profits and transfer pricing; (4) Labour income; (5) Beneficial ownership, royalties and capital gains; (6) Relief for double taxation and limitation on benefits (LOB); and (7) Non-discrimination, exchange of information and recovery.

Tax Residence of Individuals within the European Union: Finding New Solutions to Old Problems

The productive and intense discussion on how to tackle tax avoidance and double non-taxation is casting a shadow over a very relevant and still unresolved issue within the European Union: double taxation. The latter is an obstacle that can hamper the effectiveness of the internal market and create tax injustice and, therefore, it should be considered as important as double non-taxation. In this context, when individuals want to exercise their fundamental freedoms in cross-border situations within the European Union, one of the elements that can easily cause double (or multiple) taxation is the concept of tax residence. Against this background, this article is aimed at analysing the obstacles caused by tax residence conflicts concerning individuals within the European Union and at outlining possible solutions to these conflicts. Two solutions are proposed. The first solution is a common definition of tax residence of individuals within the European Union that takes into account either the place from which an individual derives the major part of his income or the place in which the individual spends more than 183 days. The second solution is aimed at accelerating dispute resolution within the European Union: setting up an ad hoc joint commission that would be obliged to solve the problems caused by double or multiple tax residence within a reasonable time frame. The author points out that the latter solution is the most appropriate one in a context that wants to keep relying on the concept of tax residence as a genuine link to exercise the power to tax.

The 21st Century Multilateralism in International Taxation: The Emperor’s New Clothes?

This contribution attempts to shed light on the concept of multilateralism in international taxation. Rather than a shift from bilateralism to multilateralism, the author will argue that unilateralism, bilateralism and multilateralism continuously overlap in this field. This flawed narrative in relation to the shift may allow us to think that the BEPS Project and global transparency in exchanges of information are leading to a global tax law: global decision-making and better solutions for developed as well as for non-developed countries. Instead, the author will claim that the current multilateral frameworks are premised on the benefits principle, which reinforces the division between developed and non-developed countries. The increase in global inequalities and poverty have led the author to propose a different multilateral framework on international taxation based on the idea of distributive justice. In other words, a multilateral framework that moves away from the dichotomy of source v. residence taxation to embrace solidarity is both desirable and feasible. Finally, the article will acknowledge the fact that regional integration processes, defined as “thick multilateralism”, already encapsulate harmonization mechanisms and an idea of justice among the EU Member States that strengthen the struggle against the existing inequalities and asymmetries.

Правовые принципы налогообложения семей

The article focuses on the tax legal basis for family policy realization in Russia. The subject of the research is the principles of family taxation, their definition and implementation in the domestic legislation. Russian tax legislation is based on individual taxation of physical persons’ income. Taxation depends on a family’s status only for tax residents of the RF. There are some deviations in the implementation of the principles of equality and fairness in the tax legislation, which deal with the double deduction and in some situations may cause the infringement of taxpayers’ rights. The comparative analysis of the national Russian tax legislation and the Agreement between EAEU (Eurasian Economic Union) countries shows that national family tax deduction is not applicable to all EAEU residents. In this article, the author also examines the EU experience in this sphere. On the basis of the study, the author concludes that the participation of the RF in EAEU requires harmonization of some tax legislation’s institutions for implementation of the principle of equality in family taxation.

The Compatibility of Exit Tax Legislation Applicable to Corporate Taxpayers in France, Germany, Italy, The Netherlands, Portugal, Spain and The United Kingdom with the EU Freedom of Establishment - Part 3

This three-part article discusses the compatibility of exit tax legislation applicable to corporate taxpayers in France, Germany, Italy, the Netherlands, Portugal, Spain and the United Kingdom with the EU freedom of establishment, especially in the light of the ECJ’s landmark National Grid decision. In part 1, which was published in Intertax volume 44, issue 1, the authors scrutinized whether a company transferring its tax residence or effecting an outbound cross-border conversion has access to Articles 49 and 54 TFEU under the laws of the Member State. It also addressed whether these laws restrict Article 49, and, if so, whether the restriction can be justified and is appropriate to ensure the attainment of its objective. Part 2, which was published in the previous Intertax issue, provided a general overview of the proportionality test in connection with exit tax legislation under Articles 49 and 54 TFEU, and subsequently discussed whether the exit tax legislation in France, Germany, Italy and the Netherlands is proportional. Finally, this part 3 reviews whether the exit tax legislation in Portugal, Spain and the United Kingdom is proportional, addresses which other transactions the ECJ’s exit tax principles apply to, and provides conclusions and recommendations.

A Change of Paradigm in International Tax Law: Article 7 of Tax Treaties and the Need To Resolve the Source versus Residence Dichotomy

The authors, in this article, consider the problem of, and the potential solution to, the need to resolve the dichotomy between source and residence taxation with regard to international taxation and tax treaties.

Effect of housing relocation subsidy policy on energy consumption: A simulation case study

This study investigates the effect of housing relocation policies on energy consumption by simulating household relocation choice behaviors and consumption behaviors. Energy consumption is estimated based on consumption behaviors. Three types of policy are analyzed: the relocation subsidy policy, the suburban residence taxation policy, and the combination of subsidy and taxation policy. The results show that all policies have influence on housing relocation choice and consumption behaviors. The number of households in a given area would increase by two percent under the relocation subsidy policy. However, this type of policy contributes to greater demand of general goods, land, and more energy consumption. A suburban residence taxation policy shows very limited effect on housing relocation choice behaviors, with only a 0.1% increase of households in the designated area. However, this policy shows strong effect on energy reduction due to shorter trip time and less demand of car trips and land. A combination of subsidy policy and suburban residence taxation policy attracts 2.2% of households move to the city center area. Energy consumption increases as consumption of general goods increases.