Interpretation and application of tax treaties:
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| Schriftenreihe: | Tolley's international series
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| Beschreibung: | XXIV, 662 S. |
| ISBN: | 0406958459 |
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| adam_text | INTERPRETATION AND APPLICATION OF TAX TREATIES NED SHELTON, B.COM., LLB
SHELTONS FLLOTTEL J^ N 11 H I I ; H I N A P U B I I S H I N CONTENTS
PAGE PREFACE ACKNOWLEDGMENTS 1. I. II. III. IV. V. VI. VII. VIII.
INTRODUCTION APPLICATION, INTERPRETATION AND ODDITIES WHAT IS A TAX
TREATY? A. DEFINITIONS : B. OTHER TREATIES COVERING TAX * C. TREATIES
AND EXECUTIVE AGREEMENTS IN THE UNITED STATES D. CORRECT TERM -
DOUBLE TAX TREATY , DOUBLE TAX AGREEMENT OR...? TYPES OF TAX TREATIES
A. COMPREHENSIVE TAX TREATIES B. TREATIES ON ESTATES AND INHERITANCES C.
SHIPPING AND AIRCRAFT TREATIES D. EXCHANGE OF INFORMATION TREATIES E.
MULTILATERAL TREATIES F. EU DIRECTIVES PURPOSE AND BENEFITS OF TAX
TREATIES A. TO AVOID DOUBLE TAXATION B. TO PREVENT FISCAL EVASION C.
OTHER PURPOSES AND BENEFITS D. TO AVOID DOUBLE NO TAX SCOPE OF TAX
TREATIES A. INTRODUCTION B. THE ELEMENTS OF SCOPE 1. TERRITORY -
GENERAL 2. TERRITORY - THE STATE 3. SOURCE AND NATURE OF THE INCOME 4.
WHICH TAXPAYERS ARE COVERED? 5. WHAT TAXES ARE COVERED? 6. TIMING C.
MORE THAN ONE TREATY MIGHT APPLY WHAT DO TREATIES NOT COVER? MODEL
TREATIES A. USE OF MODEL TREATIES B. MODELS IN EXISTENCE C. THE OECD AND
UN MODELS GENERALLY D. THE OECD MODEL E. THE UNITED NATIONS AND THE UN
MODEL RELATIONSHIP BETWEEN TAX TREATIES AND DOMESTIC LAW A. GENERAL B.
CAN TAX TREATIES CREATE TAX LIABILITY? C. CAN A TREATY DETERIORATE THE
POSITION OF THE TAXPAYER? V VIII 1 4 4 6 6 7 9 9 10 10 11 13 14 15 15 20
21 22 22 22 27 27 28 30 32 33 36 37 37 38 38 39 39 39 41 45 45 48 51 IX
CONTENTS IX. 2. I. II. III. IRE A. B. C. D. :ATY MAKING, WAR, ETC TREATY
MAKING 1. RE STEP 1 - THE INITIAL CONTACT 2. RE STEP 2 - AGREEING ON
PRIORITIES 3. RE STEP 10 - SIGNING (AND INITIALLING) 4. RE STEP 12 -
RATIFICATION, ETC 5. RE STEP 15 - ENTRY INTO FORCE 6. RE STEP 16 - THE
EFFECTIVE DATE DOES A TREATY EXIST? 1. ARE THE PROCEDURES COMPLETE? 2.
SUCCESSION STATES TERMINATION OF TREATIES VALIDITY OF TREATIES IN WAR
TIME AND UNDER ARMED CONFLICTS DOMESTIC TAX LAW OF RELEVANCE TO THE
APPLICATION OF TAX TREATIES WHAT DOMESTIC LAW IS RELEVANT? RESIDENCY A.
B.X C. D. NEXUS WORLDWIDE (GLOBAL) SYSTEMS AND TERRITORIALITY SYSTEMS
RESIDENCE OF COMPANIES 1. METHODS OF DETERMINING RESIDENCY 2.
MANAGEMENT AND CONTROL VERSUS LEGAL SEAT 3. TESTS BASED ON PLACE OF
MANAGEMENT 4. INCORPORATION VERSUS MANAGEMENT - WHICH CAN TAXPAYERS
BEST EXPLOIT? 5. AN EXAMPLE OF THE DEFINITION OF RESIDENCE * AUSTRALIA
6. DUAL RESIDENCE (A) CORPORATE RESIDENCE PLANNING RESIDENCE OF
INDIVIDUALS 1. FRANCE (A) PERSONAL TEST (B) PROFESSIONAL TEST (C)
ECONOMIC AND FINANCIAL TEST 2. GERMANY 3. UK RESIDENCE AND DOMICILE (A)
DEFINITION OF RESIDENCE AND OF ORDINARY RESIDENCE (B) CONSEQUENCE OF
BEING RESIDENT (C) A NOTE ON THE UK DOMICILE REGIME AND INHERITANCE
TAX SOURCE TAXATION A. B. C. D. E. SOURCE UNDER TAX TREATIES AN EXAMPLE
UNDER DOMESTIC LAW - LUXEMBOURG RESTRICTED AND UNRESTRICTED SOURCE
TAXATION SOURCE RULES: THE PAY RULE AND USE RULE SOURCE RULES:
WITHHOLDING TAXES 1. DIVIDENDS 2. INTEREST 51 51 53 54 55 56 56 57 59 59
60 61 62 63 65 65 65 66 66 67 68 69 70 70 71 72 73 73 73 73 74 74 74 75
75 75 75 77 78 79 80 80 81 CONTENTS 3. ROYALTIES 81 4. TECHNICAL
ASSISTANCE FEES, SERVICE FEES, CONSULTING FEES 82 5. INCOME FROM TRADING
82 F. DUAL-SOURCED INCOME AND OTHER ISSUES 83 G. NOTES ON SPECIFIC
JURISDICTIONS 84 1. AUSTRALIA 84 2. LUXEMBOURG 85 3. THE UNITED STATES
86 IV. DOUBLE TAXATION AND ITS AVOIDANCE (RELIEF) 88 A. DOUBLE TAXATION
88 1. JURIDICAL DOUBLE TAXATION 88 2. ECONOMIC DOUBLE TAXATION 89 3.
COMPREHENSIVE AND SCHEDULAR TAX SYSTEMS 89 B. AVOIDANCE OF DOUBLE TAX
(RELIEF) 90 1. GENERAL 90 2. METHODS OF RELIEVING JURIDICAL DOUBLE
TAXATION 91 (A) CREDIT SYSTEMS 91 (B) EXEMPTION 92 (C) DEDUCTION METHOD
92 (D) SUMMARY TABLE 96 3. METHODS OF RELIEVING ECONOMIC DOUBLE TAXATION
97 (A) THE CLASSICAL SYSTEM 99 (B) THE IMPUTATION AND TAX CREDIT SYSTEMS
100 (C) THE EXEMPTION SYSTEM (AND PARTICIPATION EXEMPTION) 102 (D)
COMPARISON: CLASSICAL, IMPUTATION AND EXEMPTION SYSTEMS 104 (E) THE
SCHEDULAR (DUAL INCOME TAX) SYSTEM 104 (F) THE DIVIDEND DEDUCTION AND
SPLIT RATE SYSTEMS 105 4. TAX SPARING CREDITS 105 3. THE OECD MODEL TAX
CONVENTION I. HISTORY OFTHE OECD MODEL 109 A. HISTORY AND FUNCTIONS OF
THE OECD ITSELF 109 1. CONSTITUTIONAL DOCUMENT - THE OECD CONVENTION 109
2. PURPOSE AND WORK OF THE OECD 111 B. HISTORY OF WORK ON TAX TREATIES
112 II. THE COMMITTEE ON FISCAL AFFAIRS AND THE CTPA 116 A. WHERE DO THE
CFA AND THE CTPA FIT IN? 116 B. WHO S WHO 117 C. TEAMS SUBORDINATE TO
THE CFA 117 III. IMPORTANCE IN THE WORLD OF TAX TREATIES 119 IV.
STRUCTURE OFTHE OECD MODEL TAX CONVENTION 122 A. TERMINOLOGY 122 B.
CHAPTERS AND ARTICLES 124 C. THE SEVEN CHAPTERS - 125 1. OVERVIEW 125
(A) CHAPTER I: SCOPE OFTHE CONVENTION 125 (B) CHAPTER II: DEFINITIONS
125 CONTENTS (C) CHAPTER III: TAXATION OF INCOME 125 (D) CHAPTER IV:
TAXATION OF CAPITAL 125 (E) CHAPTER V: METHODS FOR ELIMINATION OF DOUBLE
TAXATION 125 (F) CHAPTER VI: SPECIAL PROVISIONS 126 (G) CHAPTER VII:
FINAL PROVISIONS 126 2. CHAPTER III - THE LIMITATION RULES 126 (A)
SHALL BE TAXABLE ONLY 128 (B) MAY BE TAXED 128 3. CHAPTER III -
UNRESTRICTED AND RESTRICTED TAXING RIGHTS 129 (A) UNRESTRICTED RIGHT OF
TAX IN THE SOURCE STATE 129 (B) RESTRICTED RIGHT OF TAX IN THE SOURCE
STATE 130 4. CHAPTER IV-TAXATION OF CAPITAL _ __ 130 5. CHAPTER V -
METHODS FOR ELIMINATION OF DOUBLE TAXATION 130 6. CHAPTER VI - SPECIAL
PROVISIONS 130 7. CHAPTER VII * FINAL PROVISIONS 131 8. LANGUAGE - AFTER
CHAPTER VII AND BEFORE THE SIGNING BLOCK 131 V. CURRENT TREATY-RELATED
WORK 131 A. PERMANENT ESTABLISHMENTS (ARTICLE 5) 131 B. E-COMMERCE
(ARTICLES 5, 7 AND 12) 135 C. THE TREATMENT OF EMPLOYMENT INCOME
(ARTICLE 15) 136 D. TAXING PENSIONS (ARTICLES 18 AND 19) 136 E. STOCK
OPTIONS (ARTICLES 13 AND 15) 137 F. ASSISTANCE IN THE COLLECTION OF
TAXES (ARTICLE 27) 138 G. SHIPPING AND AIR TRANSPORT (ARTICLE 8) 139 H.
MUTUAL AGREEMENT PROCEDURE AND DISPUTE RESOLUTION (ARTICLE 25) 139 I.
TRUSTS AND INVESTMENT FUNDS 139 J. EXCHANGE OF INFORMATION AND OECD
MODEL TIEA (ARTICLE 26) 140 K. PLACE OF EFFECTIVE MANAGEMENT (ARTICLE 4)
141 L. ANTI-TREATY SHOPPING, ETC 142 VI. THE FUTURE 142 A. WEAKENED AND
COMPLICATED GEOGRAPHIC NEXUS 143 B. ALTERNATIVES? 144 C. THE FUTURE OF
THE OECD S WORK ON TAX TREATIES 145 4. INTERPRETATION OF TAX TREATIES I.
BACKGROUND 147 A. THE INTERPRETATION OF INTERNATIONAL TREATIES 147 B.
DIFFERENCES IN RULES OF INTERPRETATION-DOMESTIC LAW 148 1. EXAMPLE - THE
UK DOMESTIC LAW RULES OF INTERPRETATION 150 (A) EXCERPTS FROM CASE LAW
150 (I) RIVER WEAR COMMISSIONERS V ADAMSON 152 (II) STOCK V FRANK JONES
(TIPTON) LTD 152 (III) MAUNSELL V OLINS 152 (IV) INCO EUROPE LTD V FIRST
CHOICE DISTRIBUTION 153 XII CONTENTS (V) PEPPER (INSPECTOR OF TAXES) V
HART 153 (VI) R V SECRETARY OF STATE FOR THE ENVIRONMENT, EX P SPATH
HOLME 154 (B) CONCLUSION ON THE UK APPROACH 154 2. DIFFERENCES BETWEEN
COMMON LAW JURISDICTIONS 154 II. THE VIENNA CONVENTION ON THE LAW OF
TREATIES (1969) 155 A. A REFLECTION OF CUSTOMARY INTERNATIONAL LAW ?
156 B. WHO ARE PARTIES TO THE VIENNA CONVENTION? 158 C. WHY HAS THE
UNITED STATES NOT RATIFIED THE VIENNA CONVENTION? 162 D. RELEVANT
ARTICLES OF THE VIENNA CONVENTION 162 III. TREATY INTERPRETATION -
GENERAL PRINCIPLES AND SELECTED ISSUES 164 A. DOES IT MATTER IF A TREATY
BECOMES DOMESTIC LAW? 164 B. APPLYING A TREATY - START WITH DOMESTIC LAW
OR THE TREATY? 165 C. THE TEXTUAL APPROACH 166 D. THE RULES OF TREATY
INTERPRETATION 166 E. A TREATY SHALL BE INTERPRETED IN GOOD FAITH 167 F.
THE ORDINARY MEANING [OF] ... THE TERMS OFTHE TREATY 168 G. A BROAD
APPROACH 170 H. THE GOAL OF COMMON INTERPRETATION 171 I. THE PURPOSE
OFTHE TREATY AND THE INTENTION OFTHE PARTIES 173 J. EXTRA-TEXTUAL,
ACCOMPANYING OR SUPPLEMENTARY MATERIALS 175 1. THE FOTHERGILL CASE 178
(A) BACKGROUND AND THE FACTS OFTHE CASE 178 (B) THE UNITED KINGDOM S
VIEW OF THE USE OF TRAVAUX PREPARATOIRES 179 (C) RECOURSE TO THE MINUTES
OF THE HAGUE CONFERENCE OF 1955 . X 180 (D) OTHER SUPPLEMENTARY MATERIAL
- ACADEMIC WRITINGS AND COURT DECISIONS 182 (E) THE NEED FOR THE
SUPPLEMENTARY MATERIAL (AIDS) TO BE AVAILABLE 183 2. THE OECD MODEL
COMMENTARY AND ARTICLE 32 OF THE VIENNA CONVENTION 184 (A) THE
INDIA-SINGAPORE DREDGING EXAMPLE 184 (B) THE OECD MODEL COMMENTARY - CAN
IT BE USED? 186 K. WHICH STATE S LAW APPLIES? 188 1. THE PIERRE BOULEZ
CASE 188 2. LAW OFTHE RESIDENT STATE, SOURCE STATE, OR BOTH? 195 L. THE
MAIN TREATY RULE - ARTICLE 3(2) 196 1. THE TEXT - AND WHEN DOES ARTICLE
3(2) APPLY? 196 2. CONTEXT - THE OECD COMMENTARY IN CONFLICT WITH THE
VIENNA CONVENTION? 197 3. OECD MODEL ARTICLE 3(2) AND THE VIENNA
CONVENTION 199 4. WHAT IF THERE IS NO MEANING IN DOMESTIC LAW? 201 (A)
BACKGROUND 201 (B) THE THIEL CASE 201 XIII CONTENTS IV. V. VI. VII.
VIII. IX. X. XL XII. M. N. THE A. B. C. THE A. B. C. THE A. B. C. D. (C)
USE OF NON-TAX MEANINGS IN THE ABSENCE OF A TAX MEANING (D) CONCLUSION -
THE PREFERRED PROCESS STATIC OR AMBULATORY? LANGUAGE CONCEPT
OF QUALIFICATION AND CONFLICTS OF QUALIFICATION MEANING AND EXAMPLES
TREATY TEXT TO AVOID CONFLICTS OF QUALIFICATION (SWITCH-OVER CLAUSES)
THE OECD MODEL COMMENTARY EXAMPLE - AND APPROACH OECD AND UN MODELS A
GREATER ROLE FOR THE UN? IMPORTANCE OF THE MODELS ^ 1. GENERAL 2.
REFERENCE IN A TREATY TO THE OECD MODEL COMMENTARY THE ROLE OF LATER
COMMENTARIES IN INTERPRETING EARLIER TREATIES INTERNATIONAL COURT OF
JUSTICE WHO CAN TAKE ACTION BEFORE THE ICJ? SPECIAL AGREEMENTS TREATIES
AND CONVENTIONS WHAT LAW IS USED FOR THE DECISIONS OF THE ICJ? HOW DOES
ONE KNOW IF A TREATY EXISTS? AUSTRALIA A. B. C. D. E. GENERAL
RELATIONSHIP WITH DOMESTIC LAW INTERPRETATION SPECIAL FEATURES CURRENT
ISSUES CANADA A. B. C. GENERAL INTERPRETATION 1. THE CROWN FOREST
CASE 2. THE INCOME TAX CONVENTIONS INTERPRETATION ACT RELATIONSHIP WITH
DOMESTIC LAW DENMARK A. B. C. GENERAL RELATIONSHIP WITH DOMESTIC LAW
INTERPRETATION IRELAND A. B. C. D. GENERAL RELATIONSHIP WITH DOMESTIC
LAW INTERPRETATION SPECIAL FEATURES FRANCE A. B. C. GENERAL RELATIONSHIP
WITH DOMESTIC LAW INTERPRETING TAX TREATIES 203 204 204 205 207 207 210
212 212 212 213 213 214 216 219 220 221 221 222 222 223 223 223 224 225
225 229 229 229 229 233 234 234 234 234 234 237 237 237 239 240 241 241
241 241 XIV CONTENTS XIII. GERMANY 243 A. GENERAL 243 B. RELATIONSHIP
WITH DOMESTIC LAW 244 C. INTERPRETATION 245 XIV. INDIA 248 A. GENERAL
248 B. RELATIONSHIP WITH DOMESTIC LAW 249 C. INTERPRETATION - RECENT
DECISIONS 251 1. COMMISSIONER OF INCOME TAX V VIJAY SHIP BREAKING 251 2.
CONNECTION PAYMENTS TO FOREIGN TELECOMMUNICATIONS COMPANIES 252 3. RE
CYRIL EUGENE PEREIRA 254 D. THE INDIAN AUTHORITY FOR ADVANCE RULINGS
(AAR) 256 E. THE MAURITIUS BASED FIIS CASE - THE MOST IMPORTANT INDIAN
TREATY CASE? 256 1. BACKGROUND 256 2. EFFECTIVELY MANAGED IN A THIRD
COUNTRY 258 3. THE ISSUE OF LIABILITY TO TAX OF THE MAURITIAN COMPANY
258 4. THE PRINCIPLE OF LIBERAL INTERPRETATION OF TREATIES 259 5. TREATY
SHOPPING 260 6. THE VIENNA CONVENTION ON THE LAW OF TREATIES (1969) 260
7. INTERPRETATION OF TREATIES 261 XV. THE UNITED KINGDOM 261 A. GENERAL
261 B. RELATIONSHIP WITH DOMESTIC LAW 261 C. INTERPRETATION 264 1.
COMMERZBANK 264 2. MEMEC PIC V INLAND REVENUE COMMISSIONERS 265 3.
CURRENT POSITION --- 266 XVI. THE UNITED STATES 268 A. GENERAL 268 B.
TREATY AND EXECUTIVE AGREEMENT 269 C. RELATIONSHIP WITH DOMESTIC LAW
270 D. INTERPRETATION 271 E. SPECIAL FEATURES - POLICY ON DIVIDEND
WITHHOLDING TAX 272 F. CURRENT ISSUES 272 5. APPLICATION OF SELECTED
IMPORTANT TREATY PROVISIONS I. ARTICLE 1: PERSONAL SCOPE 275 A. GENERAL
275 B. NON-CONFORMING TREATIES 276 C. THE OECD MODEL COMMENTARY -
COMMENTARY ON WHAT? 278 II. ARTICLE 4: RESIDENCE 279 A. THE ROLE OF
RESIDENCE IN TREATIES 279 B. RESIDENT ONLY FOR THE PURPOSES OF THAT
TREATY 281 C. LIABLE TO TAX 281 1. INTRODUCTION 281 2. THE INDIA-UAE
TREATY AND THE RE PEREIRA RULING 282 XV ; CONTENTS 3. OTHER TREATIES
WITH THE UAE 283 4. MEANING OF LIABLE TO TAX 285 (A) REFERS TO THE
PERSON NOT THE ITEM OF INCOME 285 (B) EXEMPT PERSONS - THE UAE, PENSION
FUNDS, LUXEMBOURG 1929 AND LABUAN 286 (C) TRANSPARENT ENTITIES 289 D.
NOT RESIDENT IF SUBJECT TO SOURCE TAX ONLY 290 E. RESERVATION BY FRANCE
ON PARTNERSHIPS 290 F. DUAL RESIDENCE - THE TIE-BREAKER CLAUSE FOR
INDIVIDUALS 291 1. TERMINOLOGY - TIE-BREAKER AND PREFERENCE
CRITERION 291 2. ARTICLE 4(2) 291 G. DUAL RESIDENCE - THE TIE-BREAKER
CLAUSE FOR COMPANIES, ETC 293 1. EFFECTIVE MANAGEMENT AND THE OECD-MODEL
293 2. OECD MEMBERS RESERVATIONS ON EFFECTIVE MANAGEMENT 294 3. OTHER
TIE-BREAKER TESTS ( PREFERENCE CRITERIA ) 295 (A) THE MUTUAL AGREEMENT
APPROACH 295 (B) THE TOTAL DENIAL APPROACH 296 (C) OTHER TESTS FOR
PREFERENCE CRITERIA 297 - 4. DUAL LISTED COMPANY PROVISIONS 297 H.
DOMESTIC TREATY-RELATED DUAL RESIDENCE LEGISLATION 298 I. REMITTANCE
BASIS ( NON-DOMS ) (UK) 299 J. NATIONALITY TAXATION (US) 300 K. US
S-CORPS - RESIDENTS OF THE UNITED STATES? 302 L. EFFECTIVE
MANAGEMENT VERSUS MANAGEMENT AND CONTROL 302 1. COMPARISON 302 2. NEW
OECD MODEL COMMENTARY ON EFFECTIVE MANAGEMENT 303 3. OECD PROPOSAL FOR
A NEW ARTICLE 4(3) - THREE TESTS 304 III. ARTICLE 5: THE PERMANENT
ESTABLISHMENT DEFINITION 305 A. A MERE PERMANENT ESTABLISHMENT IS NOT
ENOUGH TO GIVE RISE TO TAX 305 B. THE CONCEPT OF PERMANENT
ESTABLISHMENT 306 1. BACKGROUND AND TERMINOLOGY 306 2. DOMESTIC LAW
EQUIVALENTS OF PERMANENT ESTABLISHMENT 307 (A) INTRODUCTORY COMMENTS 309
C. REPRESENTATIVE OFFICES 310 D. THE DEFINITION OF PERMANENT
ESTABLISHMENT - OVERVIEW 310 E. WHAT IS AN ENTERPRISE ? 312 F. ARTICLE
5(1)- BASIC-RULE PERMANENT ESTABLISHMENTS 314 1. ELEMENTS 314 2.
REQUIREMENT TO BE FIXED 314 3. OFFSHORE ACTIVITIES, LEASING AND OTHER
SPECIFIC AREAS 315 4. IS HUMAN INTERVENTION NECESSARY? 316 G. ARTICLE
5(2) - THE POSITIVE LIST 317 H. ARTICLE 5(4) - THE NEGATIVE LIST 319 I.
ARTICLE 5(3) - CONSTRUCTION PERMANENT ESTABLISHMENTS 320 J. ARTICLE
5(5) - AGENCY PERMANENT ESTABLISHMENTS 322 K. A NOTE ON WEBSITES,
SERVERS AND E-COMMERCE 325 XVI CONTENTS L. COMMENCEMENT AND TERMINATION
327 M. THE NEW UNITED KINGDOM DEFINITION 327 N. THE USE OF PERMANENT
ESTABLISHMENTS IN INTERNATIONAL TAX PLANNING 331 IV. ARTICLE 7: TAXATION
OF BUSINESS PROFITS 332 A. MAIN RULE 333 B. SEPARATE ENTITY APPROACH 335
C. ALLOCATION OF EXPENSES 337 D. TRANSFER BETWEEN HEAD OFFICE AND
PERMANENT ESTABLISHMENTS 340 E. CONSTRUCTION CLAUSE PERMANENT
ESTABLISHMENTS 341 F. PERMANENT ESTABLISHMENTS AND DIVIDEND,! INTEREST
AND ROYALTY INCOME * *-** 342 G. THE NEED TO PREPARE ACCOUNTS 343 V.
ARTICLE 8: SHIPPING AND AIR TRANSPORT 343 A. OVERVIEW 343 B. EFFECTIVE
MANAGEMENT 344 C. ARTICLE 8 344 D. WHAT IS DEFINED IN ARTICLE 8? 344 E.
ARTICLE 8 VERSUS ARTICLE 7 345 F. THE SCOPE OF ARTICLE 8 INCOME AND
PROFITS 346 G. SOME RESERVATIONS ON THE COMMENTARY 349 H. TRIANGULAR
ARTICLE 8 SITUATIONS . 349 I. EXAMPLES OF A NON-OECD MODEL ARTICLE 350
VI. ARTICLE 9: TRANSFER PRICING UNDER TAX TREATIES 351 A. OVERVIEW 351
B. DOES ARTICLE 9(1) HAVE ANY MEANING? 353 C. DOES PARAGRAPH 1 DEFINE
THE SCOPE OF PARAGRAPH 2? 354 D. IS ARTICLE 9 A LIMITATION (OR
ALLOCATION OR ATTRIBUTION) ARTICLE? 357 E. PARAGRAPH 2 - NO SUCH THING
AS A CORRESPONDING ADJUSTMENT 358 F. DOES ARTICLE 9(2)HAVE TEETH? 358
G. ENTERPRISES AND ASSOCIATED ENTERPRISES 360 1. ENTERPRISE 360 2.
ASSOCIATED 361 H. SECONDARY ADJUSTMENTS 362 I. THIN CAPITALISATION AND
ARTICLE 9 362 J. TRANSFER PRICING AND ARTICLES 11 AND 12 362 VII.
ARTICLE 10: DIVIDENDS 363 A. OVERVIEW 363 B. UN DIFFERENCES 364 C. SOME
TERMS AND CONCEPTS IN ARTICLE 10 364 D. BENEFICIAL OWNER 366 E.
DEFINITION 368 F. BRANCH PROFITS TAX 368 G. EXTRA-TERRITORIAL TAXATION
OF DIVIDENDS 370 VIII. ARTICLE 11: INTEREST 370 A. OVERVIEW 370 B.
BENEFICIAL OWNER 371 XVII CONTENTS C. DEFINITION 371 D. SOURCE RULES -
ARISING IN AND PAID BY 373 E. PAID 374 IX ARTICLE 12: ROYALTIES
375 A. OVERVIEW 375 B. SOURCE RULE 375 C. UNITED NATIONS MODEL
DIFFERENCES 376 D. DEFINITION 376 E. TAX TREATMENT OF COMPUTER SOFTWARE
379 X. ARTICLE 13: CAPITAL GAINS 381 A. OVERVIEW 381 B. THE LAMESA CASE
; 383 C. SPECIFIC PROBLEMS ^ . 383 D. OTHER ASSETS 383 XI. ARTICLE 15:
INCOME FROM EMPLOYMENT 384 A. THE MAIN RULE - AND SOME COMMON
MISCONCEPTIONS 384 B. ARTICLE 15 AND OTHER ARTICLES 385 C. LIMITATIONS
ON THE WORKING STATE S RIGHT TO TAX 385 D. SOME SELECTED ISSUES 386 S 1.
WHO IS THE EMPLOYER? 386 2. WHAT IS SALARIES, WAGES AND OTHER SIMILAR
REMUNERATION ? 386 3. WHAT DOES DERIVED MEAN? , 387 4. WHAT IS 183
DAYS ? 387 E. INTERNATIONAL HIRING-OUT OF LABOUR 388 XII. ARTICLE 16:
TAXATION OF DIRECTORS 390 XIII. ARTICLE 17: ARTISTES AND SPORTSMEN 392
XIV. ARTICLE 18: PENSIONS 394 XV. ARTICLE 21: OTHER INCOME 396 XVI.
ARTICLE 23: DOUBLE TAXATION RELIEF 397 A. IN GENERAL - STEP 2 IN THE
ELIMINATION OF JURIDICAL DOUBLE TAXATION 397 1. EXEMPTION METHOD -
ARTICLE 23 A 397 2. CREDIT METHOD - ARTICLE 23B 398 B. TAX SPARING
CREDIT 399 C. THE GROSS-NET ISSUE 399 D. CLASSIFICATION CONFLICTS 400
E. TAXATION OF DIVIDENDS UNDER TAX TREATIES 401 1. DIVIDENDS DISTRIBUTED
TO INDIVIDUALS 401 (A) STATES WITH THE CLASSICAL SYSTEM 401 (B) STATES
WHICH PROVIDE RELIEF AT THE SHAREHOLDER S LEVEL 401 2. DIVIDENDS
DISTRIBUTED TO COMPANIES 402 (A) CLASSICAL SYSTEM IN THE STATE OF THE
SUBSIDIARY 402 (B) IMPUTATION SYSTEM IN THE STATE OF THE SUBSIDIARY 402
6. DOMESTIC AND TREATY-BASED ANTI-AVOIDANCE MEASURES I. CONCEPTS,
CATEGORIES AND SOURCES 403 II. ANTI-AVOIDANCE MEASURES UNDER DOMESTIC
LAW 405 XVIII CONTENTS A. WHICH IS SUPERIOR - DOMESTIC ANTI-AVOIDANCE
LAW OR THE TREATY? 405 B. GERMANY 407 1. GENERAL - SECTION 42AO 407 2.
ANTI-TREATY SHOPPING 408 C. JAPAN 408 D. SPAIN 409 E. SWITZERLAND 409 1.
INTRODUCTION 409 2. THE 1962 DECREE 409 F. THE US 411 III.
ANTI-AVOIDANCE PROVISIONS UNDER TREATIES , 412 A. WHAT PROVISIONS ARE
INCLUDED IN THE OECD MODEL? 412 B. WHAT DOES THE OECD RECOMMEND? 413 1.
BASE COMPANIES 414 2. CONDUIT COMPANIES 415 (A) DIRECT CONDUITS 415 (B)
STEPPING STONE CONDUITS 415 (C) SOLUTIONS RECOMMENDED BY THE CONDUIT
COMPANY REPORT 416 C. LIMITATION ON BENEFITS ( LOB ) CLAUSES 417 D.
OTHER SPECIFIC ANTI-ABUSE PROVISIONS IN TREATIES 419 7. HYBRID ENTITIES
AND PARTNERSHIPS I. WHAT IS A HYBRID ENTITY? 421 A. CIVIL LAW, COMMON
LAW, COMPANIES AND CONFUSION * TERMINOLOGY 421 B. HYBRID ENTITIES AND
REVERSE HYBRIDS ? 421 C. PARTNERSHIPS 424 1. HYBRIDS AND PARTNERSHIPS
426 2. PARTNERSHIPS - LEGAL PERSONS? 427 D. TRUSTS 429 E. FOUNDATIONS
431 F. CO-OPERATIVES AND ASSOCIATIONS 431 G. EUROPEAN ECONOMIC INTEREST
GROUPINGS (EEIGS) 434 II. LOCAL LEGAL ENTITIES - CLASSIFICATION AND
TAXATION 435 A. AUSTRALIA 436 1. LEGAL FORMS 436 2. TAXATION 436 (A)
PARTNERSHIPS AND COMPANIES 436 (B) TRUSTS 438 3. ENTITY CLASSIFICATION
FOR TAX PURPOSES 440 B. BELGIUM 441 1. LEGAL FORMS 441 (A) COMPANIES 441
(I) THE NV/SA 441 (II) THE BVBA/SPRL 442 (III) PORTFOLIO COMPANIES 442
XIX CONTENTS (B) GENERAL PARTNERSHIP (VOF) AND LIMITED PARTNERSHIP 443
(C) PARTNERSHIP LIMITED BY SHARES 443 (D) CO-OPERATIVES - THE CV/SC AND
THE CVOHA/ SCRIS 443 (E) ENTITIES (BUSINESS FORMS) WITHOUT LEGAL
PERSONALITY 443 2. TAXATION 443 3. ENTITY CLASSIFICATION FOR TAX
PURPOSES 444 C. DENMARK - PARTNERSHIP COMPANIES (THE P/S) 444 D. FRANCE
445 1. LEGAL FORMS *, 445 (A) COMPANIES V __ 445 (I) CORPORATION (SA)
446 (II) LIMITED LIABILITY COMPANY (SARL) 446 (B) ECONOMIC GROUPS (GIE)
447 (C) PARTNERSHIPS AND OTHER LEGAL FORMS 447 2. TAXATION 448 (A) TAX
LIABILITY BASED ON LEGAL FORM 448 (B) TAX LIABILITY BASED ON DOING
BUSINESS 448 (C) TAX LIABILITY BASED ON ELECTION 448 E. GERMANY 449 1.
LEGAL FORM 449 (A) COMPANIES 449 (I) STOCK COMPANY (PUBLIC COMPANY) (AG)
449 (II) LIMITED LIABILITY COMPANY (PRIVATE COMPANY) (GMBH) 450 (B)
LIMITED PARTNERSHIP WITH SHARES (KGAA) 451 (C) PARTNERSHIPS 451 2.
TAXATION 452 3. ENTITY CLASSIFICATION FOR TAX PURPOSES 454 F. SWEDEN 456
1. LEGAL FORMS 456 (A) COMPANIES 456 (I) PUBLIC COMPANY 457 (II) PRIVATE
COMPANY 458 (B) PARTNERSHIPS 458 (C) ASSOCIATIONS AND CO-OPERATIVES 459
(D) FOUNDATION 460 (E) NON-PROFIT ASSOCIATIONS 460 2. TAXATION AND
ENTITY CLASSIFICATION FOR TAX PURPOSES 460 G. SWITZERLAND -
CLASSIFICATION 463 H. THE UNITED KINGDOM 463 1. LIMITED LIABILITY
PARTNERSHIPS * LEGAL AND TAX ASPECTS 463 2. ENTITY CLASSIFICATION FOR
TAX PURPOSES ,465 I. THE UNITED STATES 472 1. LEGAL FORMS 472 (A)
CORPORATION 473 (B) JOINT STOCK COMPANY 473 XX CONTENTS (C) PARTNERSHIPS
474 (I) GENERAL PARTNERSHIP 474 (II) LIMITED PARTNERSHIP 474 (III)
LIMITED LIABILITY PARTNERSHIP (LLP) 474 (D) LIMITED LIABILITY COMPANY
(LLC) 474 2. TAXATION 475 3. ENTITY CLASSIFICATION FOR TAX PURPOSES 477
4. US CHECK-THE-BOX RULES 478 III. THE OECD REPORT ON PARTNERSHIPS 479
A. INTRODUCTION 480 B. WHEN IS A PARTNERSHIP ENTITLED TO TREATY
BENEFITS? 480 C. IS A PARTNERSHIP A PERSON? * 481 D. IS A PARTNERSHIP A
RESIDENT OF A CONTRACTING STATE? 485 E. IS THE PARTNERSHIP LIABLE TO
TAX? 485 F. OECD REPORT EXAMPLES 486 IV. SELECTED TAX PLANNING
TECHNIQUES USING HYBRID ENTITIES 492 A. US CHECK-THE-BOX FOR US TAX
PLANNING 492 1. SCENARIO 492 2. USE 492 B. USING A US OR NON-US LLC FOR
NON-US TAX PLANNING 492 1. SCENARIO 492 2. USE 492 C. SILENT
PARTNERSHIPS 493 1. SCENARIO 493 2. USE 493 D. UK-FRENCH TAX PLANNING:
THE SNC DOUBLE DIP STRUCTURE 493 1. SCENARIO 493 2. USE 494 8. HYBRID
FINANCING AND FINANCIAL ISSUES I. HYBRID INSTRUMENTS - WHAT ARE THEY AND
WHY USE THEM? 495 A. WHAT IS A HYBRID INSTRUMENT? 495 B. HYBRIDS AND
SPVS 496 C. WHY USE HYBRIDS? 497 D. TERMINOLOGY 497 II. CLASSIFICATION
498 A. TYPES OF HYBRID - BASIC FORMS 498 1. CONVERTIBLE NOTES
(CONVERTIBLE LOANS) 498 2. DIVIDEND-YIELDING BONDS 499 3. PERPETUAL DEBT
499 4. PROFIT-SHARING LOANS OR PROFIT-PARTICIPATING LOANS 500 5.
PREFERRED SHARES 501 6. REDEEMABLE PREFERRED SHARES 501 7. SUBORDINATED
DEBT , 502 8. ZERO COUPON BONDS ( ZEROS ) 503 B. LOANS, DERIVATIVES,
OTHER INSTRUMENTS AND SPECIAL FORMS OF HYBRID 503 1. LOANS 503 2.
OPTIONS AND RIGHTS 503 XXI CONTENTS 3. INCOME ACCESS SHARES 504 4. BONDS
504 5. DEBENTURES 504 6. DISCOUNTED SECURITIES 505 7. ORIGINAL ISSUE
DISCOUNT (OID) SECURITIES 505 8. JOUISSANCE SHARES 505 C. WHAT ARE WE
CLASSIFYING? 505 D. WHO AND WHAT IS THE TAXPAYER? 506 E. TESTS USED IN
CLASSIFICATION 506 1. EQUITY CLASSIFICATION 508 2. DEBT CLASSIFICATION
509 III. WITHHOLDING TAX IMPLICATIONS UNDER TAX TREATIES 510 A. GENERAL
V . _- 510 B. DIVIDENDS 511 C. INTEREST 514 IV. DOUBLE TAXATION RELIEF -
516 V. NOTES ON SPECIFIC JURISDICTIONS 518 A. THE UNITED KINGDOM 518 1.
CLASSIFICATION - DEBT OR EQUITY? 518 2. THE MEMEC CASE 521 B. THE UNITED
STATES 522 C. THE NETHERLANDS 524 1. THE BASIC POSITION ON
CLASSIFICATION 524 (A) DECISION OF 11 MARCH 1998 524 (B) DECISION OF 17
FEBRUARY 1999 ^^ 525 2. THE HYBRID LOAN LEGISLATION OF 2002 526 3.
REVERSE CONVERTIBLE NOTES (RCNS) 527 VI. THIN CAPITALISATION 527 A.
CONCEPT 527 B. ANTI-AVOIDANCE APPROACHES 528 C. INTERNATIONAL TAX
IMPLICATIONS OF THIN CAP 528 D. TREATIES AND THIN CAPITALISATION 529
VII. A NOTE ON TAX PLANNING 530 9. SPECIAL ISSUES I. THE UNITED NATIONS
AD HOC GROUP OF EXPERTS 531 A. MEMBERS AND MEETINGS 531 B. HISTORY 532
C. TERMS OF REFERENCE 532 D. WORK 533 E. THE FUTURE OF THE GROUP OF
EXPERTS 533 II. A WORLD TAX BODY? 534 A. NAMES AND BACKGROUND 535 B.
GOVERNMENT ORGANISATIONS WORKING IN THE TAX FIELD 536 C. TWO EFFORTS -
UN AND OECD 537 1. THE UNITED NATIONS - AN ITO OR JUST AN UPGRADE? 537
(A) WHAT DOES THE UN WANT? 537 (B) THE ZEDILLO REPORT 538 (C) THE
MONTERREY CONSENSUS 539 XXII CONTENTS 2. THE OECD-LED EFFORT -
INTERNATIONAL TAX DIALOGUE (ITD) 539 3. THE FUNCTION AND WORK OFTHE ITD
541 III. TRIANGULAR CASES 542 A. EXAMPLE 9.1- PERMANENT ESTABLISHMENT
SITUATIONS 543 1. THE SCENARIO 543 2. THE PROBLEM AND THE B-C TREATY
POSITION 543 3. THE A-C TREATY POSITION 545 4. DOMESTIC LAW CREDITS FOR
THIRD COUNTRY INCOME OF PES 546 5. THE NON-DISCRIMINATION ARTICLE
(ARTICLE 24) 547 6. TRIANGULAR CASES, MODEL TAX CONVENTION: FOUR
RELATED STUDIES -, 547 7. EXAMPLE OF A TREATY ADDRESSING THE PROBLEM
547 8. TAX PLANNING AND TREATY REACTIONS 548 B. EXAMPLE 9.2 - THE
TRANS-TASMAN EXAMPLE 549 10. ESTATE AND INHERITANCE TAX TREATIES I.
ESTATE AND INHERITANCE TAX 553 A. INTRODUCTION TO ESTATE AND INHERITANCE
TAX 553 B. CONNECTING FACTORS 554 C. A NOTE ON GIFTS 555 11. DOUBLE AND
MULTIPLE TAX 555 III. TERMINOLOGY - INHERITANCE TAX , DEATH TAX ,
ESTATE DUTY , PROBATE , ETC 557 IV. THE OECD ESTATE, INHERITANCE AND
GIFT MODEL CONVENTION (1982) 559 A. THE 1966 DRAFT MODEL AND 1982 MODEL
559 B. STRUCTURE OFTHE 1982 MODEL 560 C. ARTICLE 1 - ESTATES,
INHERITANCES AND GIFTS COVERED 562 D. ARTICLE 2 - TAXES COVERED 563 1.
GENERAL 563 2. SOME ISSUES 563 3. GIFTS AND TRANSFER PRICING 564 E.
ARTICLE 3 - GENERAL DEFINITIONS 566 F. ARTICLE 4 - FISCAL DOMICILE 566
G. CHAPTER III - TAXING RULES 568 V. RELATIONSHIP WITH THE OECD INCOME
TAX MODEL 568 A. ARTICLE 2 - TAXES COVERED 568 B. INTERPRETATION -
RELEVANCE OF THE OECD INCOME TAX MODEL 571 C. RELATIONSHIP BETWEEN
ARTICLE 22 AND ESTATE AND INHERITANCE TAX TREATIES 572 VI. SELECTED
ISSUES 573 A. ESTATE AND INHERITANCE TAX IN THE CONTEXT OF EMIGRATION
574 B. DOUBLE TAXATION FROM CAPITAL GAINS TAX AND DEATH TAXES 575 C.
INTER VIVOS GIFTS IN THE TAXABLE BASE OF DEATH TAXES 575 D. RELATIONSHIP
BETWEEN DEATH TAXES AND WEALTH TAXES 575 XXM CONTENTS 11. CASE STUDIES
I. THE JOHN DEERE 9520 CASE 577 A. THE QUESTION 577 B. THE SOLUTION 578
II. THE JOHN DEERE 9520 CASE * FOCUS ON FINANCING 583 A. THE QUESTION
583 B. THE SOLUTION 583 III. SHIPPING PROFITS - SANGHVI SHIPPING LTD 584
A. THE QUESTION 584 B. THE SOLUTION 584 IV. PIERRE SINGS A SORRY SONG
585 A. THE QUESTION ~ 585 B. THE SOLUTION - -- 586 V. TRIANGULAR CASE
- TAX SPARING 587 A. THE QUESTION 587 B. THE SOLUTION 587 VI. DIFFERENT
CLASSIFICATION (HIRING OUT OF LABOUR) 589 A. THE QUESTION 589 B THE
SOLUTION 590 VII. TREATY APPLICATION - LENDING FROM MALAYSIA 593 A. THE
QUESTION 593 B. THE SOLUTION 594 VIII. LENDING TO PARTNERS IN A
PARTNERSHIP - 1 599 A. THE QUESTION 599 B. THE SOLUTION 599 IX. LENDING
TO PARTNERS IN A PARTNERSHIP - 2 601 A. THE QUESTION 601 B. THE SOLUTION
601 X. SALE OF SHARES OR OF INTEREST IN A PARTNERSHIP 602 A. THE
QUESTION 602 B. THE SOLUTION 603 XI. HYBRID ENTITIES - ROYALTY INCOME
605 A. THE QUESTION 605 B. THE SOLUTION 606 APPENDIX 1: OECD MEMBER
COUNTRIES (AS AT 1 JULY 2003) 607 APPENDIX 2: MEMBERS OFTHE UNITED
NATIONS 609 INDEX 619 XXIV
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INTERPRETATION AND APPLICATION OF TAX TREATIES NED SHELTON, B.COM., LLB
SHELTONS "FLLOTTEL J^ N 11 H I I ; H I N A P U B I I S H I N CONTENTS
PAGE PREFACE ACKNOWLEDGMENTS 1. I. II. III. IV. V. VI. VII. VIII.
INTRODUCTION APPLICATION, INTERPRETATION AND ODDITIES WHAT IS A TAX
TREATY? A. DEFINITIONS : B. OTHER TREATIES COVERING TAX *" C. 'TREATIES'
AND 'EXECUTIVE AGREEMENTS' IN THE UNITED STATES D. CORRECT TERM -
'DOUBLE TAX TREATY', 'DOUBLE TAX AGREEMENT' OR.? TYPES OF TAX TREATIES
A. COMPREHENSIVE TAX TREATIES B. TREATIES ON ESTATES AND INHERITANCES C.
SHIPPING AND AIRCRAFT TREATIES D. EXCHANGE OF INFORMATION TREATIES E.
MULTILATERAL TREATIES F. EU DIRECTIVES PURPOSE AND BENEFITS OF TAX
TREATIES A. TO AVOID DOUBLE TAXATION B. TO PREVENT FISCAL EVASION C.
OTHER PURPOSES AND BENEFITS D. TO AVOID 'DOUBLE NO TAX' SCOPE OF TAX
TREATIES A. INTRODUCTION B. THE ELEMENTS OF 'SCOPE' 1. TERRITORY -
GENERAL 2. TERRITORY - THE 'STATE' 3. SOURCE AND NATURE OF THE INCOME 4.
WHICH TAXPAYERS ARE COVERED? 5. WHAT TAXES ARE COVERED? 6. TIMING C.
MORE THAN ONE TREATY MIGHT APPLY WHAT DO TREATIES NOT COVER? MODEL
TREATIES A. USE OF MODEL TREATIES B. MODELS IN EXISTENCE C. THE OECD AND
UN MODELS GENERALLY D. THE OECD MODEL E. THE UNITED NATIONS AND THE UN
MODEL RELATIONSHIP BETWEEN TAX TREATIES AND DOMESTIC LAW A. GENERAL B.
CAN TAX TREATIES CREATE TAX LIABILITY? C. CAN A TREATY DETERIORATE THE
POSITION OF THE TAXPAYER? V VIII 1 4 4 6 6 7 9 9 10 10 11 13 14 15 15 20
21 22 22 22 27 27 28 30 32 33 36 37 37 38 38 39 39 39 41 45 45 48 51 IX
CONTENTS IX. 2. I. II. III. IRE A. B. C. D. :ATY MAKING, WAR, ETC TREATY
MAKING 1. RE STEP 1 - THE INITIAL CONTACT 2. RE STEP 2 - AGREEING ON
PRIORITIES 3. RE STEP 10 - SIGNING (AND INITIALLING) 4. RE STEP 12 -
RATIFICATION, ETC 5. RE STEP 15 - ENTRY INTO FORCE 6. RE STEP 16 - THE
EFFECTIVE DATE DOES A TREATY EXIST? 1. ARE THE PROCEDURES COMPLETE? 2.
SUCCESSION STATES TERMINATION OF TREATIES \ VALIDITY OF TREATIES IN WAR
TIME AND UNDER ARMED CONFLICTS DOMESTIC TAX LAW OF RELEVANCE TO THE
APPLICATION OF TAX TREATIES WHAT DOMESTIC LAW IS RELEVANT? RESIDENCY A.
B.X C. D. NEXUS WORLDWIDE (GLOBAL) SYSTEMS AND TERRITORIALITY SYSTEMS
RESIDENCE OF COMPANIES 1. METHODS OF DETERMINING RESIDENCY 2.
'MANAGEMENT AND CONTROL' VERSUS 'LEGAL SEAT' 3. TESTS BASED ON PLACE OF
MANAGEMENT 4. 'INCORPORATION' VERSUS 'MANAGEMENT' - WHICH CAN TAXPAYERS
BEST EXPLOIT? 5. AN EXAMPLE OF THE DEFINITION OF RESIDENCE * AUSTRALIA
6. DUAL RESIDENCE (A) CORPORATE RESIDENCE PLANNING RESIDENCE OF
INDIVIDUALS 1. FRANCE (A) PERSONAL TEST (B) PROFESSIONAL TEST (C)
ECONOMIC AND FINANCIAL TEST 2. GERMANY 3. UK RESIDENCE AND DOMICILE (A)
DEFINITION OF 'RESIDENCE' AND OF 'ORDINARY RESIDENCE' (B) CONSEQUENCE OF
BEING RESIDENT (C) A NOTE ON THE UK 'DOMICILE' REGIME AND INHERITANCE
TAX SOURCE TAXATION A. B. C. D. E. SOURCE UNDER TAX TREATIES AN EXAMPLE
UNDER DOMESTIC LAW - LUXEMBOURG RESTRICTED AND UNRESTRICTED SOURCE
TAXATION SOURCE RULES: THE 'PAY RULE' AND 'USE RULE' SOURCE RULES:
WITHHOLDING TAXES 1. DIVIDENDS 2. INTEREST 51 51 53 54 55 56 56 57 59 59
60 61 62 63 65 65 65 66 66 67 68 69 70 70 71 72 73 73 73 73 74 74 74 75
75 75 75 77 78 79 80 80 81 CONTENTS 3. ROYALTIES 81 4. TECHNICAL
ASSISTANCE FEES, SERVICE FEES, CONSULTING FEES 82 5. INCOME FROM TRADING
82 F. DUAL-SOURCED INCOME AND OTHER ISSUES 83 G. NOTES ON SPECIFIC
JURISDICTIONS 84 1. AUSTRALIA 84 2. LUXEMBOURG 85 3. THE UNITED STATES
86 IV. DOUBLE TAXATION AND ITS AVOIDANCE (RELIEF) 88 A. DOUBLE TAXATION
88 1. JURIDICAL DOUBLE TAXATION 88 2. ECONOMIC DOUBLE TAXATION \ 89 3.
COMPREHENSIVE AND SCHEDULAR TAX SYSTEMS 89 B. AVOIDANCE OF DOUBLE TAX
(RELIEF) 90 1. GENERAL 90 2. METHODS OF RELIEVING JURIDICAL DOUBLE
TAXATION 91 (A) CREDIT SYSTEMS 91 (B) EXEMPTION 92 (C) DEDUCTION METHOD
92 (D) SUMMARY TABLE 96 3. METHODS OF RELIEVING ECONOMIC DOUBLE TAXATION
97 (A) THE CLASSICAL SYSTEM 99 (B) THE IMPUTATION AND TAX CREDIT SYSTEMS
100 (C) THE EXEMPTION SYSTEM (AND PARTICIPATION EXEMPTION) 102 (D)
COMPARISON: CLASSICAL, IMPUTATION AND EXEMPTION SYSTEMS 104 (E) THE
SCHEDULAR (DUAL INCOME TAX) SYSTEM 104 (F) THE DIVIDEND DEDUCTION AND
SPLIT RATE SYSTEMS 105 4. TAX SPARING CREDITS 105 3. THE OECD MODEL TAX
CONVENTION I. HISTORY OFTHE OECD MODEL 109 A. HISTORY AND FUNCTIONS OF
THE OECD ITSELF 109 1. CONSTITUTIONAL DOCUMENT - THE OECD CONVENTION 109
2. PURPOSE AND WORK OF THE OECD 111 B. HISTORY OF WORK ON TAX TREATIES
112 II. THE COMMITTEE ON FISCAL AFFAIRS AND THE CTPA 116 A. WHERE DO THE
CFA AND THE CTPA FIT IN? 116 B. WHO'S WHO 117 C. TEAMS SUBORDINATE TO
THE CFA 117 III. IMPORTANCE IN THE WORLD OF TAX TREATIES 119 IV.
STRUCTURE OFTHE OECD MODEL TAX CONVENTION 122 A. TERMINOLOGY 122 B.
CHAPTERS AND ARTICLES 124 C. THE SEVEN CHAPTERS - 125 1. OVERVIEW 125
(A) CHAPTER I: SCOPE OFTHE CONVENTION 125 (B) CHAPTER II: DEFINITIONS
125 CONTENTS (C) CHAPTER III: TAXATION OF INCOME 125 (D) CHAPTER IV:
TAXATION OF CAPITAL 125 (E) CHAPTER V: METHODS FOR ELIMINATION OF DOUBLE
TAXATION 125 (F) CHAPTER VI: SPECIAL PROVISIONS 126 (G) CHAPTER VII:
FINAL PROVISIONS 126 2. CHAPTER III - THE LIMITATION RULES 126 (A)
'SHALL BE TAXABLE ONLY' 128 (B) 'MAY BE TAXED' 128 3. CHAPTER III -
UNRESTRICTED AND RESTRICTED TAXING RIGHTS 129 (A) UNRESTRICTED RIGHT OF
TAX IN THE SOURCE STATE 129 (B) RESTRICTED RIGHT OF TAX IN THE SOURCE
STATE 130 4. CHAPTER IV-TAXATION OF CAPITAL _ _ 130 5. CHAPTER V -
METHODS FOR ELIMINATION OF DOUBLE TAXATION 130 6. CHAPTER VI - SPECIAL
PROVISIONS 130 7. CHAPTER VII * FINAL PROVISIONS 131 8. LANGUAGE - AFTER
CHAPTER VII AND BEFORE THE SIGNING BLOCK 131 V. CURRENT TREATY-RELATED
WORK 131 A. PERMANENT ESTABLISHMENTS (ARTICLE 5) 131 B. E-COMMERCE
(ARTICLES 5, 7 AND 12) 135 C. THE TREATMENT OF EMPLOYMENT INCOME
(ARTICLE 15) 136 D. TAXING PENSIONS (ARTICLES 18 AND 19) 136 E. STOCK
OPTIONS (ARTICLES 13 AND 15) 137 F. ASSISTANCE IN THE COLLECTION OF
TAXES (ARTICLE 27) 138 G. SHIPPING AND AIR TRANSPORT (ARTICLE 8) 139 H.
MUTUAL AGREEMENT PROCEDURE AND DISPUTE RESOLUTION (ARTICLE 25) 139 I.
TRUSTS AND INVESTMENT FUNDS 139 J. EXCHANGE OF INFORMATION AND OECD
MODEL TIEA (ARTICLE 26) 140 K. PLACE OF EFFECTIVE MANAGEMENT (ARTICLE 4)
141 L. ANTI-TREATY SHOPPING, ETC 142 VI. THE FUTURE 142 A. WEAKENED AND
COMPLICATED GEOGRAPHIC NEXUS 143 B. ALTERNATIVES? 144 C. THE FUTURE OF
THE OECD'S WORK ON TAX TREATIES 145 4. INTERPRETATION OF TAX TREATIES I.
BACKGROUND 147 A. THE INTERPRETATION OF INTERNATIONAL TREATIES 147 B.
DIFFERENCES IN RULES OF INTERPRETATION-DOMESTIC LAW 148 1. EXAMPLE - THE
UK DOMESTIC LAW RULES OF INTERPRETATION 150 (A) EXCERPTS FROM CASE LAW
150 (I) RIVER WEAR COMMISSIONERS V ADAMSON 152 (II) STOCK V FRANK JONES
(TIPTON) LTD 152 (III) MAUNSELL V OLINS 152 (IV) INCO EUROPE LTD V FIRST
CHOICE DISTRIBUTION 153 XII CONTENTS (V) PEPPER (INSPECTOR OF TAXES) V
HART 153 (VI) R V SECRETARY OF STATE FOR THE ENVIRONMENT, EX P SPATH
HOLME 154 (B) CONCLUSION ON THE UK APPROACH 154 2. DIFFERENCES BETWEEN
COMMON LAW JURISDICTIONS 154 II. THE VIENNA CONVENTION ON THE LAW OF
TREATIES (1969) 155 A. A REFLECTION OF 'CUSTOMARY INTERNATIONAL LAW'?
156 B. WHO ARE PARTIES TO THE VIENNA CONVENTION? 158 C. WHY HAS THE
UNITED STATES NOT RATIFIED THE VIENNA CONVENTION? 162 D. RELEVANT
ARTICLES OF THE VIENNA CONVENTION 162 III. TREATY INTERPRETATION -
GENERAL PRINCIPLES AND SELECTED ISSUES 164 A. DOES IT MATTER IF A TREATY
BECOMES DOMESTIC LAW? 164 B. APPLYING A TREATY - START WITH DOMESTIC LAW
OR THE TREATY? 165 C. THE TEXTUAL APPROACH 166 D. THE RULES OF TREATY
INTERPRETATION 166 E. A TREATY SHALL BE INTERPRETED IN GOOD FAITH 167 F.
THE 'ORDINARY MEANING [OF] . THE TERMS OFTHE TREATY' 168 G. A BROAD
APPROACH 170 H. THE GOAL OF'COMMON INTERPRETATION' 171 I. THE'PURPOSE
OFTHE TREATY'AND THE'INTENTION OFTHE PARTIES' 173 J. EXTRA-TEXTUAL,
ACCOMPANYING OR SUPPLEMENTARY MATERIALS 175 1. THE FOTHERGILL CASE 178
(A) BACKGROUND AND THE FACTS OFTHE CASE 178 (B) THE UNITED KINGDOM'S
VIEW OF THE USE OF TRAVAUX PREPARATOIRES 179 (C) RECOURSE'TO THE MINUTES
OF THE HAGUE CONFERENCE OF 1955 . X 180 (D) OTHER SUPPLEMENTARY MATERIAL
- ACADEMIC WRITINGS AND COURT DECISIONS 182 (E) THE NEED FOR THE
SUPPLEMENTARY MATERIAL (AIDS) TO BE AVAILABLE 183 2. THE OECD MODEL
COMMENTARY AND ARTICLE 32 OF THE VIENNA CONVENTION 184 (A) THE
INDIA-SINGAPORE'DREDGING'EXAMPLE 184 (B) THE OECD MODEL COMMENTARY - CAN
IT BE USED? 186 K. WHICH STATE'S LAW APPLIES? 188 1. THE PIERRE BOULEZ
CASE 188 2. LAW OFTHE RESIDENT STATE, SOURCE STATE, OR BOTH? 195 L. THE
MAIN TREATY RULE - ARTICLE 3(2) 196 1. THE TEXT - AND WHEN DOES ARTICLE
3(2) APPLY? 196 2. CONTEXT - THE OECD COMMENTARY IN CONFLICT WITH THE
VIENNA CONVENTION? 197 3. OECD MODEL ARTICLE 3(2) AND THE VIENNA
CONVENTION 199 4. WHAT IF THERE IS NO MEANING IN DOMESTIC LAW? 201 (A)
BACKGROUND 201 (B) THE THIEL CASE 201 XIII CONTENTS IV. V. VI. VII.
VIII. IX. X. XL XII. M. N. THE A. B. C. THE A. B. C. THE A. B. C. D. (C)
USE OF NON-TAX MEANINGS IN THE ABSENCE OF A TAX MEANING (D) CONCLUSION -
THE PREFERRED PROCESS STATIC OR AMBULATORY? LANGUAGE CONCEPT
OF'QUALIFICATION' AND 'CONFLICTS OF QUALIFICATION' MEANING AND EXAMPLES
TREATY TEXT TO 'AVOID' CONFLICTS OF QUALIFICATION (SWITCH-OVER CLAUSES)
THE OECD MODEL COMMENTARY EXAMPLE - AND APPROACH OECD AND UN MODELS A
GREATER ROLE FOR THE UN? IMPORTANCE OF THE MODELS ^ 1. GENERAL 2.
REFERENCE IN A TREATY TO THE OECD MODEL COMMENTARY THE ROLE OF LATER
COMMENTARIES IN INTERPRETING EARLIER TREATIES INTERNATIONAL COURT OF
JUSTICE WHO CAN TAKE ACTION BEFORE THE ICJ? SPECIAL AGREEMENTS TREATIES
AND CONVENTIONS WHAT LAW IS USED FOR THE DECISIONS OF THE ICJ? HOW DOES
ONE KNOW IF A TREATY EXISTS? AUSTRALIA A. B. C. D. E. GENERAL
RELATIONSHIP WITH DOMESTIC LAW INTERPRETATION SPECIAL FEATURES CURRENT
ISSUES '""' CANADA A. B. C. GENERAL INTERPRETATION 1. THE CROWN FOREST
CASE 2. THE INCOME TAX CONVENTIONS INTERPRETATION ACT RELATIONSHIP WITH
DOMESTIC LAW DENMARK A. B. C. GENERAL RELATIONSHIP WITH DOMESTIC LAW
INTERPRETATION IRELAND A. B. C. D. GENERAL RELATIONSHIP WITH DOMESTIC
LAW INTERPRETATION SPECIAL FEATURES FRANCE A. B. C. GENERAL RELATIONSHIP
WITH DOMESTIC LAW INTERPRETING TAX TREATIES 203 204 204 205 207 207 210
212 212 212 213 213 214 216 219 220 221 221 222 222 223 223 223 224 225
225 229 229 229 229 233 234 234 234 234 234 237 237 237 239 240 241 241
241 241 XIV CONTENTS XIII. GERMANY 243 A. GENERAL 243 B. RELATIONSHIP
WITH DOMESTIC LAW 244 C. INTERPRETATION 245 XIV. INDIA 248 A. GENERAL
248 B. RELATIONSHIP WITH DOMESTIC LAW 249 C. INTERPRETATION - RECENT
DECISIONS 251 1. COMMISSIONER OF INCOME TAX V VIJAY SHIP BREAKING 251 2.
CONNECTION PAYMENTS TO FOREIGN TELECOMMUNICATIONS COMPANIES 252 3. RE
CYRIL EUGENE PEREIRA \ 254 D. THE INDIAN AUTHORITY FOR ADVANCE RULINGS
(AAR) 256 E. THE MAURITIUS BASED FIIS CASE - THE MOST IMPORTANT INDIAN
TREATY CASE? 256 1. BACKGROUND 256 2. EFFECTIVELY MANAGED IN A THIRD
COUNTRY 258 3. THE ISSUE OF LIABILITY TO TAX OF THE MAURITIAN COMPANY
258 4. THE PRINCIPLE OF LIBERAL INTERPRETATION OF TREATIES 259 5. TREATY
SHOPPING 260 6. THE VIENNA CONVENTION ON THE LAW OF TREATIES (1969) 260
7. INTERPRETATION OF TREATIES 261 XV. THE UNITED KINGDOM 261 A. GENERAL
261 B. RELATIONSHIP WITH DOMESTIC LAW 261 C. INTERPRETATION 264 1.
COMMERZBANK 264 2. MEMEC PIC V INLAND REVENUE COMMISSIONERS 265 3.
CURRENT POSITION --- 266 XVI. THE UNITED STATES 268 A. GENERAL 268 B.
'TREATY' AND 'EXECUTIVE AGREEMENT' 269 C. RELATIONSHIP WITH DOMESTIC LAW
270 D. INTERPRETATION 271 E. SPECIAL FEATURES - POLICY ON DIVIDEND
WITHHOLDING TAX 272 F. CURRENT ISSUES 272 5. APPLICATION OF SELECTED
IMPORTANT TREATY PROVISIONS I. ARTICLE 1: PERSONAL SCOPE 275 A. GENERAL
275 B. NON-CONFORMING TREATIES 276 C. THE OECD MODEL COMMENTARY -
COMMENTARY ON WHAT? 278 II. ARTICLE 4: RESIDENCE 279 A. THE ROLE OF
RESIDENCE IN TREATIES 279 B. RESIDENT ONLY FOR THE PURPOSES OF THAT
TREATY 281 C. 'LIABLE TO TAX' 281 1. INTRODUCTION 281 2. THE INDIA-UAE
TREATY AND THE RE PEREIRA RULING 282 XV ; CONTENTS 3. OTHER TREATIES
WITH THE UAE 283 4. MEANING OF 'LIABLE TO TAX' 285 (A) REFERS TO THE
PERSON NOT THE ITEM OF INCOME 285 (B) EXEMPT PERSONS - THE UAE, PENSION
FUNDS, LUXEMBOURG 1929 AND LABUAN 286 (C) TRANSPARENT ENTITIES 289 D.
NOT RESIDENT IF SUBJECT TO SOURCE TAX ONLY 290 E. RESERVATION BY FRANCE
ON PARTNERSHIPS 290 F. DUAL RESIDENCE - THE TIE-BREAKER CLAUSE FOR
INDIVIDUALS 291 1. TERMINOLOGY - 'TIE-BREAKER' AND 'PREFERENCE
CRITERION' 291 2. ARTICLE 4(2) 291 G. DUAL RESIDENCE - THE TIE-BREAKER
CLAUSE FOR COMPANIES, ETC 293 1. EFFECTIVE MANAGEMENT AND THE OECD-MODEL
293 2. OECD MEMBERS' RESERVATIONS ON EFFECTIVE MANAGEMENT 294 3. OTHER
TIE-BREAKER TESTS ('PREFERENCE CRITERIA') 295 (A) THE MUTUAL AGREEMENT
APPROACH 295 (B) THE 'TOTAL DENIAL' APPROACH 296 (C) OTHER TESTS FOR
'PREFERENCE CRITERIA' 297 - 4. DUAL LISTED COMPANY PROVISIONS 297 H.
DOMESTIC TREATY-RELATED DUAL RESIDENCE LEGISLATION 298 I. REMITTANCE
BASIS ('NON-DOMS') (UK) 299 J. NATIONALITY TAXATION (US) 300 K. US
'S-CORPS' - RESIDENTS OF THE UNITED STATES? 302 L. 'EFFECTIVE
MANAGEMENT' VERSUS 'MANAGEMENT AND CONTROL' 302 1. COMPARISON 302 2. NEW
OECD MODEL COMMENTARY ON 'EFFECTIVE MANAGEMENT' 303 3. OECD PROPOSAL FOR
A NEW ARTICLE 4(3) - THREE TESTS 304 III. ARTICLE 5: THE PERMANENT
ESTABLISHMENT DEFINITION 305 A. A MERE PERMANENT ESTABLISHMENT IS NOT
ENOUGH TO GIVE RISE TO TAX 305 B. THE CONCEPT OF'PERMANENT
ESTABLISHMENT' 306 1. BACKGROUND AND TERMINOLOGY 306 2. DOMESTIC LAW
EQUIVALENTS OF PERMANENT ESTABLISHMENT 307 (A) INTRODUCTORY COMMENTS 309
C. REPRESENTATIVE OFFICES 310 D. THE DEFINITION OF PERMANENT
ESTABLISHMENT - OVERVIEW 310 E. WHAT IS'AN ENTERPRISE'? 312 F. ARTICLE
5(1)-'BASIC-RULE'PERMANENT ESTABLISHMENTS 314 1. ELEMENTS 314 2.
REQUIREMENT TO BE FIXED 314 3. OFFSHORE ACTIVITIES, LEASING AND OTHER
SPECIFIC AREAS 315 4. IS HUMAN INTERVENTION NECESSARY? 316 G. ARTICLE
5(2) - THE POSITIVE LIST 317 H. ARTICLE 5(4) - THE NEGATIVE LIST 319 I.
ARTICLE 5(3) - 'CONSTRUCTION' PERMANENT ESTABLISHMENTS 320 J. ARTICLE
5(5) - AGENCY PERMANENT ESTABLISHMENTS 322 K. A NOTE ON WEBSITES,
SERVERS AND E-COMMERCE 325 XVI CONTENTS L. COMMENCEMENT AND TERMINATION
327 M. THE NEW UNITED KINGDOM DEFINITION 327 N. THE USE OF PERMANENT
ESTABLISHMENTS IN INTERNATIONAL TAX PLANNING 331 IV. ARTICLE 7: TAXATION
OF BUSINESS PROFITS 332 A. MAIN RULE 333 B. SEPARATE ENTITY APPROACH 335
C. ALLOCATION OF EXPENSES 337 D. TRANSFER BETWEEN HEAD OFFICE AND
PERMANENT ESTABLISHMENTS 340 E. 'CONSTRUCTION CLAUSE' PERMANENT
ESTABLISHMENTS 341 F. PERMANENT ESTABLISHMENTS AND DIVIDEND,! INTEREST
AND ROYALTY INCOME *"*-** 342 G. THE NEED TO PREPARE ACCOUNTS 343 V.
ARTICLE 8: SHIPPING AND AIR TRANSPORT 343 A. OVERVIEW 343 B. EFFECTIVE
MANAGEMENT 344 C. ARTICLE 8 344 D. WHAT IS DEFINED IN ARTICLE 8? 344 E.
ARTICLE 8 VERSUS ARTICLE 7 345 F. THE SCOPE OF ARTICLE 8 INCOME AND
PROFITS 346 G. SOME RESERVATIONS ON THE COMMENTARY 349 H. TRIANGULAR
ARTICLE 8 SITUATIONS . 349 I. EXAMPLES OF A NON-OECD MODEL ARTICLE 350
VI. ARTICLE 9: TRANSFER PRICING UNDER TAX TREATIES 351 A. OVERVIEW 351
B. DOES ARTICLE 9(1) HAVE ANY MEANING? 353' C. DOES PARAGRAPH 1 DEFINE
THE SCOPE OF PARAGRAPH 2? 354 D. IS ARTICLE 9 A LIMITATION (OR
ALLOCATION OR ATTRIBUTION) ARTICLE? 357 E. PARAGRAPH 2 - NO SUCH THING
AS A 'CORRESPONDING ADJUSTMENT' 358 F. DOES ARTICLE 9(2)HAVE TEETH? 358
G. 'ENTERPRISES' AND 'ASSOCIATED ENTERPRISES' 360 1. ENTERPRISE 360 2.
ASSOCIATED 361 H. SECONDARY ADJUSTMENTS 362 I. THIN CAPITALISATION AND
ARTICLE 9 362 J. TRANSFER PRICING AND ARTICLES 11 AND 12 362 VII.
ARTICLE 10: DIVIDENDS 363 A. OVERVIEW 363 B. UN DIFFERENCES 364 C. SOME
TERMS AND CONCEPTS IN ARTICLE 10 364 D. BENEFICIAL OWNER 366 E.
DEFINITION 368 F. BRANCH PROFITS TAX 368 G. EXTRA-TERRITORIAL TAXATION
OF DIVIDENDS 370 VIII. ARTICLE 11: INTEREST 370 A. OVERVIEW 370 B.
BENEFICIAL OWNER 371 XVII CONTENTS C. DEFINITION 371 D. SOURCE RULES -
'ARISING IN' AND 'PAID BY' 373 E. 'PAID' 374 IX ARTICLE 12: ROYALTIES
375 A. OVERVIEW 375 B. SOURCE RULE 375 C. UNITED NATIONS MODEL
DIFFERENCES 376 D. DEFINITION 376 E. TAX TREATMENT OF COMPUTER SOFTWARE
379 X. ARTICLE 13: CAPITAL GAINS 381 A. OVERVIEW 381 B. THE LAMESA CASE
; 383 C. SPECIFIC PROBLEMS ^ . 383 D. OTHER ASSETS 383 XI. ARTICLE 15:
INCOME FROM EMPLOYMENT 384 A. THE MAIN RULE - AND SOME COMMON
MISCONCEPTIONS 384 B. ARTICLE 15 AND OTHER ARTICLES 385 C. LIMITATIONS
ON THE WORKING STATE'S RIGHT TO TAX 385 D. SOME SELECTED ISSUES 386 S 1.
WHO IS THE EMPLOYER? 386 2. WHAT IS 'SALARIES, WAGES AND OTHER SIMILAR
REMUNERATION'? 386 3. WHAT DOES'DERIVED'MEAN? , 387 4. WHAT IS'183
DAYS'? 387 E. INTERNATIONAL HIRING-OUT OF LABOUR 388 XII. ARTICLE 16:
TAXATION OF DIRECTORS 390 XIII. ARTICLE 17: ARTISTES AND SPORTSMEN 392
XIV. ARTICLE 18: PENSIONS 394 XV. ARTICLE 21: OTHER INCOME 396 XVI.
ARTICLE 23: DOUBLE TAXATION RELIEF 397 A. IN GENERAL - STEP 2 IN THE
ELIMINATION OF JURIDICAL DOUBLE TAXATION 397 1. EXEMPTION METHOD -
ARTICLE 23 A 397 2. CREDIT METHOD - ARTICLE 23B 398 B. TAX SPARING
CREDIT 399 C. THE 'GROSS-NET' ISSUE 399 D. CLASSIFICATION CONFLICTS 400
E. TAXATION OF DIVIDENDS UNDER TAX TREATIES 401 1. DIVIDENDS DISTRIBUTED
TO INDIVIDUALS 401 (A) STATES WITH THE CLASSICAL SYSTEM 401 (B) STATES
WHICH PROVIDE RELIEF AT THE SHAREHOLDER'S LEVEL 401 2. DIVIDENDS
DISTRIBUTED TO COMPANIES 402 (A) CLASSICAL SYSTEM IN THE STATE OF THE
SUBSIDIARY 402 (B) IMPUTATION SYSTEM IN THE STATE OF THE SUBSIDIARY 402
6. DOMESTIC AND TREATY-BASED ANTI-AVOIDANCE MEASURES I. CONCEPTS,
CATEGORIES AND SOURCES 403 II. ANTI-AVOIDANCE MEASURES UNDER DOMESTIC
LAW 405 XVIII CONTENTS A. WHICH IS SUPERIOR - DOMESTIC ANTI-AVOIDANCE
LAW OR THE TREATY? 405 B. GERMANY 407 1. GENERAL - SECTION 42AO 407 2.
ANTI-TREATY SHOPPING 408 C. JAPAN 408 D. SPAIN 409 E. SWITZERLAND 409 1.
INTRODUCTION 409 ' 2. THE 1962 DECREE 409 F. THE US 411 III.
ANTI-AVOIDANCE PROVISIONS UNDER TREATIES , 412 A. WHAT PROVISIONS ARE
INCLUDED IN THE OECD MODEL? 412 B. WHAT DOES THE OECD RECOMMEND? 413 1.
BASE COMPANIES 414 2. CONDUIT COMPANIES 415 (A) DIRECT CONDUITS 415 (B)
'STEPPING STONE'CONDUITS 415 (C) SOLUTIONS RECOMMENDED BY THE CONDUIT
COMPANY REPORT 416 C. LIMITATION ON BENEFITS ('LOB') CLAUSES 417 D.
OTHER SPECIFIC ANTI-ABUSE PROVISIONS IN TREATIES 419 7. HYBRID ENTITIES
AND PARTNERSHIPS I. WHAT IS A HYBRID ENTITY? 421 A. CIVIL LAW, COMMON
LAW, COMPANIES AND CONFUSION * TERMINOLOGY 421 B. HYBRID ENTITIES AND
'REVERSE HYBRIDS'? 421 C. PARTNERSHIPS 424 1. HYBRIDS AND PARTNERSHIPS
426 2. PARTNERSHIPS - LEGAL PERSONS? 427 D. TRUSTS 429 E. FOUNDATIONS
431 F. CO-OPERATIVES AND ASSOCIATIONS 431 G. EUROPEAN ECONOMIC INTEREST
GROUPINGS (EEIGS) 434 II. LOCAL LEGAL ENTITIES - CLASSIFICATION AND
TAXATION 435 A. AUSTRALIA 436 1. LEGAL FORMS 436 2. TAXATION 436 (A)
PARTNERSHIPS AND COMPANIES 436 (B) TRUSTS 438 3. ENTITY CLASSIFICATION
FOR TAX PURPOSES 440 B. BELGIUM 441 1. LEGAL FORMS 441 (A) COMPANIES 441
(I) THE NV/SA 441 (II) THE BVBA/SPRL 442 (III) PORTFOLIO COMPANIES 442
XIX CONTENTS (B) GENERAL PARTNERSHIP (VOF) AND LIMITED PARTNERSHIP 443
(C) PARTNERSHIP LIMITED BY SHARES 443 (D) CO-OPERATIVES - THE CV/SC AND
THE CVOHA/ SCRIS 443 (E) ENTITIES (BUSINESS FORMS) WITHOUT LEGAL
PERSONALITY 443 2. TAXATION 443 3. ENTITY CLASSIFICATION FOR TAX
PURPOSES 444 C. DENMARK - PARTNERSHIP COMPANIES (THE P/S) 444 D. FRANCE
445 1. LEGAL FORMS *, 445 (A) COMPANIES V _ 445 (I) CORPORATION (SA)
446 (II) LIMITED LIABILITY COMPANY (SARL) 446 (B) ECONOMIC GROUPS (GIE)
447 (C) PARTNERSHIPS AND OTHER LEGAL FORMS 447 2. TAXATION 448 (A) TAX
LIABILITY BASED ON LEGAL FORM 448 (B) TAX LIABILITY BASED ON DOING
BUSINESS 448 (C) TAX LIABILITY BASED ON ELECTION 448 E. GERMANY 449 1.
LEGAL FORM 449 (A) COMPANIES 449 (I) STOCK COMPANY (PUBLIC COMPANY) (AG)
449 (II) LIMITED LIABILITY COMPANY (PRIVATE COMPANY) (GMBH) 450 (B)
LIMITED PARTNERSHIP WITH SHARES (KGAA) 451 (C) PARTNERSHIPS 451 2.
TAXATION 452 3. ENTITY CLASSIFICATION FOR TAX PURPOSES 454 F. SWEDEN 456
1. LEGAL FORMS 456 (A) COMPANIES 456 (I) PUBLIC COMPANY 457 (II) PRIVATE
COMPANY 458 (B) PARTNERSHIPS 458 (C) ASSOCIATIONS AND CO-OPERATIVES 459
(D) FOUNDATION 460 (E) NON-PROFIT ASSOCIATIONS 460 2. TAXATION AND
ENTITY CLASSIFICATION FOR TAX PURPOSES 460 G. SWITZERLAND -
CLASSIFICATION 463 H. THE UNITED KINGDOM 463 1. LIMITED LIABILITY
PARTNERSHIPS * LEGAL AND TAX ASPECTS 463 2. ENTITY CLASSIFICATION FOR
TAX PURPOSES ,465 I. THE UNITED STATES 472 1. LEGAL FORMS 472 (A)
CORPORATION 473 (B) JOINT STOCK COMPANY 473 XX CONTENTS (C) PARTNERSHIPS
474 (I) GENERAL PARTNERSHIP 474 (II) LIMITED PARTNERSHIP 474 (III)
LIMITED LIABILITY PARTNERSHIP (LLP) 474 (D) LIMITED LIABILITY COMPANY
(LLC) 474 2. TAXATION 475 3. ENTITY CLASSIFICATION FOR TAX PURPOSES 477
4. US 'CHECK-THE-BOX' RULES 478 III. THE OECD REPORT ON PARTNERSHIPS 479
A. INTRODUCTION 480 B. WHEN IS A PARTNERSHIP ENTITLED TO TREATY
BENEFITS? 480 C. IS A PARTNERSHIP A PERSON? * 481 D. IS A PARTNERSHIP A
'RESIDENT' OF A CONTRACTING STATE? 485 E. IS THE PARTNERSHIP LIABLE TO
TAX? 485 F. OECD REPORT EXAMPLES 486 IV. SELECTED TAX PLANNING
TECHNIQUES USING HYBRID ENTITIES 492 A. US CHECK-THE-BOX FOR US TAX
PLANNING 492 1. SCENARIO 492 2. USE 492 B. USING A US OR NON-US LLC FOR
NON-US TAX PLANNING 492 1. SCENARIO 492 2. USE 492 C. SILENT
PARTNERSHIPS 493 1. SCENARIO 493 2. USE 493 D. UK-FRENCH TAX PLANNING:
THE SNC DOUBLE DIP STRUCTURE 493 1. SCENARIO 493 2. USE 494 8. HYBRID
FINANCING AND FINANCIAL ISSUES I. HYBRID INSTRUMENTS - WHAT ARE THEY AND
WHY USE THEM? 495 A. WHAT IS A HYBRID INSTRUMENT? 495 B. HYBRIDS AND
SPVS 496 C. WHY USE HYBRIDS? 497 D. TERMINOLOGY 497 II. CLASSIFICATION
498 A. TYPES OF HYBRID - BASIC FORMS 498 1. CONVERTIBLE NOTES
(CONVERTIBLE LOANS) 498 2. DIVIDEND-YIELDING BONDS 499 3. PERPETUAL DEBT
499 4. PROFIT-SHARING LOANS OR PROFIT-PARTICIPATING LOANS 500 5.
PREFERRED SHARES 501 6. REDEEMABLE PREFERRED SHARES 501 7. SUBORDINATED
DEBT , 502 8. ZERO COUPON BONDS ('ZEROS') 503 B. LOANS, DERIVATIVES,
OTHER INSTRUMENTS AND SPECIAL FORMS OF HYBRID 503 1. LOANS 503 2.
OPTIONS AND RIGHTS 503 XXI CONTENTS 3. INCOME ACCESS SHARES 504 4. BONDS
504 5. DEBENTURES 504 6. DISCOUNTED SECURITIES 505 7. ORIGINAL ISSUE
DISCOUNT (OID) SECURITIES 505 8. JOUISSANCE SHARES 505 C. WHAT ARE WE
CLASSIFYING? 505 D. WHO AND WHAT IS THE TAXPAYER? 506 E. TESTS USED IN
CLASSIFICATION 506 1. EQUITY CLASSIFICATION 508 2. DEBT CLASSIFICATION
509 III. WITHHOLDING TAX IMPLICATIONS UNDER TAX TREATIES 510 A. GENERAL
V . _- 510 B. DIVIDENDS 511 C. INTEREST 514 IV. DOUBLE TAXATION RELIEF -
516 V. NOTES ON SPECIFIC JURISDICTIONS 518 A. THE UNITED KINGDOM 518 1.
CLASSIFICATION - DEBT OR EQUITY? 518 2. THE MEMEC CASE 521 B. THE UNITED
STATES 522 C. THE NETHERLANDS 524 1. THE BASIC POSITION ON
CLASSIFICATION 524 (A) DECISION OF 11 MARCH 1998 524 (B) DECISION OF 17
FEBRUARY 1999 ^^ 525 2. THE HYBRID LOAN LEGISLATION OF 2002 526 3.
REVERSE CONVERTIBLE NOTES (RCNS) 527 VI. THIN CAPITALISATION 527 A.
CONCEPT 527 B. ANTI-AVOIDANCE APPROACHES 528 C. INTERNATIONAL TAX
IMPLICATIONS OF 'THIN CAP' 528 D. TREATIES AND THIN CAPITALISATION 529
VII. A NOTE ON TAX PLANNING 530 9. SPECIAL ISSUES I. THE UNITED NATIONS
AD HOC GROUP OF EXPERTS 531 A. MEMBERS AND MEETINGS 531 B. HISTORY 532
C. TERMS OF REFERENCE 532 D. WORK 533 E. THE FUTURE OF THE GROUP OF
EXPERTS 533 II. A WORLD TAX BODY? 534 A. NAMES AND BACKGROUND 535 B.
GOVERNMENT ORGANISATIONS WORKING IN THE TAX FIELD 536 C. TWO EFFORTS -
UN AND OECD 537 1. THE UNITED NATIONS - AN ITO OR JUST AN UPGRADE? 537
(A) WHAT DOES THE UN WANT? 537 (B) THE ZEDILLO REPORT 538 (C) THE
MONTERREY CONSENSUS 539 XXII CONTENTS 2. THE OECD-LED EFFORT -
INTERNATIONAL TAX DIALOGUE (ITD) 539 3. THE FUNCTION AND WORK OFTHE ITD
541 III. TRIANGULAR CASES 542 A. EXAMPLE 9.1- PERMANENT ESTABLISHMENT
SITUATIONS 543 1. THE SCENARIO 543 2. THE PROBLEM AND THE B-C TREATY
POSITION 543 3. THE A-C TREATY POSITION 545 4. DOMESTIC LAW CREDITS FOR
THIRD COUNTRY INCOME OF PES 546 5. THE NON-DISCRIMINATION ARTICLE
(ARTICLE 24) 547 6. 'TRIANGULAR CASES, MODEL TAX CONVENTION: FOUR
RELATED STUDIES' -, 547 7. EXAMPLE OF A TREATY ADDRESSING THE PROBLEM
547 8. TAX PLANNING AND TREATY REACTIONS 548 B. EXAMPLE 9.2 - THE
TRANS-TASMAN EXAMPLE 549 10. ESTATE AND INHERITANCE TAX TREATIES I.
ESTATE AND INHERITANCE TAX 553 A. INTRODUCTION TO ESTATE AND INHERITANCE
TAX 553 B. CONNECTING FACTORS 554 C. A NOTE ON GIFTS 555 11. DOUBLE AND
MULTIPLE TAX 555 III. TERMINOLOGY - 'INHERITANCE TAX', 'DEATH TAX',
'ESTATE DUTY', 'PROBATE', ETC 557 IV. THE OECD ESTATE, INHERITANCE AND
GIFT MODEL CONVENTION (1982) 559 A. THE 1966 DRAFT MODEL AND 1982 MODEL
559 B. STRUCTURE OFTHE 1982 MODEL 560 C. ARTICLE 1 - ESTATES,
INHERITANCES AND GIFTS COVERED 562 D. ARTICLE 2 - TAXES COVERED 563 1.
GENERAL 563 2. SOME ISSUES 563 3. GIFTS AND TRANSFER PRICING 564 E.
ARTICLE 3 - GENERAL DEFINITIONS 566 F. ARTICLE 4 - FISCAL DOMICILE 566
G. CHAPTER III - TAXING RULES 568 V. RELATIONSHIP WITH THE OECD INCOME
TAX MODEL 568 A. ARTICLE 2 - TAXES COVERED 568 B. INTERPRETATION -
RELEVANCE OF THE OECD INCOME TAX MODEL 571 C. RELATIONSHIP BETWEEN
ARTICLE 22 AND ESTATE AND INHERITANCE TAX TREATIES 572 VI. SELECTED
ISSUES 573 A. ESTATE AND INHERITANCE TAX IN THE CONTEXT OF EMIGRATION
574 B. DOUBLE TAXATION FROM CAPITAL GAINS TAX AND DEATH TAXES 575 C.
INTER VIVOS GIFTS IN THE TAXABLE BASE OF DEATH TAXES 575 D. RELATIONSHIP
BETWEEN DEATH TAXES AND WEALTH TAXES 575 XXM CONTENTS 11. CASE STUDIES
I. THE JOHN DEERE 9520 CASE 577 A. THE QUESTION 577 B. THE SOLUTION 578
II. THE JOHN DEERE 9520 CASE * FOCUS ON FINANCING 583 A. THE QUESTION
583 B. THE SOLUTION 583 III. SHIPPING PROFITS - SANGHVI SHIPPING LTD 584
A. THE QUESTION 584 B. THE SOLUTION 584 IV. PIERRE SINGS A SORRY SONG
585 A. THE QUESTION ~ 585 B. THE SOLUTION '- -- 586 V. TRIANGULAR CASE
- TAX SPARING 587 A. THE QUESTION 587 B. THE SOLUTION 587 VI. DIFFERENT
CLASSIFICATION (HIRING OUT OF LABOUR) 589 A. THE QUESTION 589 B THE
SOLUTION 590 VII. TREATY APPLICATION - LENDING FROM MALAYSIA 593 A. THE
QUESTION \ 593 B. THE SOLUTION 594 VIII. LENDING TO PARTNERS IN A
PARTNERSHIP - 1 599 A. THE QUESTION 599 B. THE SOLUTION 599 IX. LENDING
TO PARTNERS IN A PARTNERSHIP - 2 601 A. THE QUESTION 601 B. THE SOLUTION
601 X. SALE OF SHARES OR OF INTEREST IN A PARTNERSHIP 602 A. THE
QUESTION 602 B. THE SOLUTION 603 XI. HYBRID ENTITIES - ROYALTY INCOME
605 A. THE QUESTION 605 B. THE SOLUTION 606 APPENDIX 1: OECD MEMBER
COUNTRIES (AS AT 1 JULY 2003) 607 APPENDIX 2: MEMBERS OFTHE UNITED
NATIONS 609 INDEX 619 XXIV |
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| spelling | Shelton, Ned Verfasser aut Interpretation and application of tax treaties Ned Shelton London LexisNexis UK 2004 XXIV, 662 S. txt rdacontent n rdamedia nc rdacarrier Tolley's international series Double taxation Treaties Tax planning GBV Datenaustausch application/pdf http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=014675245&sequence=000001&line_number=0001&func_code=DB_RECORDS&service_type=MEDIA Inhaltsverzeichnis |
| spellingShingle | Shelton, Ned Interpretation and application of tax treaties Double taxation Treaties Tax planning |
| title | Interpretation and application of tax treaties |
| title_auth | Interpretation and application of tax treaties |
| title_exact_search | Interpretation and application of tax treaties |
| title_exact_search_txtP | Interpretation and application of tax treaties |
| title_full | Interpretation and application of tax treaties Ned Shelton |
| title_fullStr | Interpretation and application of tax treaties Ned Shelton |
| title_full_unstemmed | Interpretation and application of tax treaties Ned Shelton |
| title_short | Interpretation and application of tax treaties |
| title_sort | interpretation and application of tax treaties |
| topic | Double taxation Treaties Tax planning |
| topic_facet | Double taxation Treaties Tax planning |
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