summary 2

Question 1

Guidlines for Art. 5 PE

Answer 1

fixed place of business; construction sites of last longer than 12 months; warehouses not included ; always harder in domestic law (already after 6 months) linkes with rule of art. 7

Question 2

Guidlines Art. 6 Immovable Capital Income

Answer 2

taxation at source without limitation (no EU 24% gross income; EU 19% with deductible expenses)

Question 3

Guidlines Art. 7 Business Profits

Answer 3

taxation at residence country, unless P.E. exists at source country (then taxation at source applying the arms length principle

Question 4

Art. 10 Dividends Guidlines

Answer 4

shared taxation but limited at source country:
- 5% if the beneficial owner holds directly at least 25% of the capital of the company paying the dividends

• 15% of the gross amount of the dividends in all other cases

Question 5

Art 11 interests

Answer 5

shared taxation; but limited at source country (max 10% rate

Question 6

royalties Art 12

Answer 6

exclusive taxation at country of residence

Question 7

Art. 13 guidelines capital gains

Answer 7

taxation depends on the nature of the good/asset being sold:

• imovable (or shares of a company that basically owns Immovable property: at source
• Assets of a P.E., will form part of the taxable base of the P.E.

Question 8

Art. 17 sports Artist, artists

Answer 8

taxation at source country (where the performance takes place) for income related with the performance even if payment is received through a company

Question 9

What are the three situation established by the MC when distributing the right to tax each source of income?

Answer 9

Unlimited taxation at source country (Art. 6)
Taxations at source country, but limited to a certain % (Art. 10&11)
exclusive taxation at residence country (Art. 12)

Question 10

What is the concept of transfer pricing?

Answer 10

price charged between related parties for the provsiosin of goods and services, the use of property or lending money; esp. relevant for the allocation of profits-> artificial allocation of the group in low tax jurisdictions

Question 11

What is the Arm’s lengths principle?

Answer 11

leading principle in TP: it requires associated enterprises to charge themselves the same prices, royalties and other fees in relation to a controlled transaction that would be charged by indpendent parties in an uncontrolled transactions in otherwise comparable circumstances; besides pricing also delivery, warranty and payment terms