Fundamentals of permanent establishments / Robert L Williams.
2014
K4550 .H87 2014 (Map It)
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Title
Fundamentals of permanent establishments / Robert L Williams.
Published
The Hague, The Netherlands : Wolters Kluwer Law & Business, [2014]
Call Number
K4550 .H87 2014
Edition
Updated and expanded second edition.
ISBN
9789041149480
9041149481
9041149481
Description
xiv, 300 pages ; 25 cm
System Control No.
(OCoLC)893453777
Bibliography, etc. Note
Includes bibliographical references (pages 285-287) and index.
Other Editions
Revision of: Huston, John, 1927- Permanent establishments : a planning primer. Deventer : Kluwer Law and Taxation Publishers, 1993. (DLC) 93005894.
Record Appears in
Table of Contents
Abbreviations
xi
Foreword
xiii
ch. 1
Historical Development of the Concept
1
1.1.
Origins in Domestic Law
2
1.2.
First Treaty Appearance
3
1.3.
First Period -- Pre League of Nations
3
1.4.
Second Period -- League of Nations 1928 Model Treaty
6
1.5.
Third Period-The 1943 Mexico Draft and the OECD 1963 Draft and 1977 Model
9
1.6.
Fourth Period-The 1980 UN Model, Services PEs and E-Commerce
11
ch. 2
Elements of the Basic Definition: Fixed Place of Business
15
2.1.
Fixed Place of Business -- The Assets PE
15
A.
Character of a `Place of Business'
16
B.
Geographic Fixation of the Place of Business -- a Fixed Place
20
1.
Basic Rule
20
2.
Touring and Moving Target Rulings
22
C.
Permanence of Business Operations -- Minimum Duration, Recurrent and One Shot Ventures
24
1.
Six Months Minimum Duration Cases
25
2.
One Shot Ventures (Less Than 6 Months)
26
3.
Recurrent Multi-Year Ventures
28
4.
Beginning and Ending Dates
30
5.
Deviations in State Practice
31
D.
`At the Disposal' of the NRE (Control of the POB by the NRE)
32
1.
The OECD 1977 Commentary is Ambiguous
33
2.
Use of Client Offices or Equipment
35
3.
Home Office Cases
42
E.
Whose Business is Conducted at the Place
44
1.
Automated POB PEs
44
2.
The Requirement that the Business of the NRE Be Conducted There
46
3.
The Mere Leasing of Real or ICS Property Does Not Create a PE of the Lessor
47
4.
Joint Venturers Who Are Not Partners or Dependent Agents
49
5.
Attribution of Business of Subcontractors to Main Contractors
51
2.2.
`Prima Facie' Examples of a Fixed Place of Business
54
A.
An `Office'
54
B.
`Place of Management'
57
1.
Modes of Expression
58
2.
A `Place of Effective Management'
59
3.
Management or Technical Expertise?
61
4.
Ownership Distinguished
61
5.
Requirement of Situs
62
6.
Permanence
62
C.
A `Branch'
63
D.
A `Store or Other Sales Outlet'
65
E.
`Factory'
69
F.
`Workshop'
70
G.
`Warehouse'
71
1.
American Warehouse Rulings
72
2.
The UN Model Provision
73
3.
US Treaties
74
H.
Other Named Places
74
I.
Agricultural and Timber Land
74
J.
Rental Real Estate
76
K.
Ships/Equipment/Containers/Race Horses
78
1.
Substantial Equipment or Machinery Clauses
79
2.
Computers and Servers
80
3.
Logging and Other Equipment
81
4.
The Race Horse Rulings
82
5.
Net Leasing of Containers
85
6.
Vending Machines, Servers and Other Automated Equipment
86
7.
Semisubmersible Drilling Vessels
86
8.
Other Ships
87
2.3.
Business Activity -- What Is It?
87
ch. 3
Building Sites and Construction or Assembly Projects
89
3.1.
Background
89
3.2.
Building Sites
92
3.3.
Construction Projects
92
3.4.
Installation Projects
94
3.5.
Assembly Project
94
3.6.
Supervisory Activities
95
3.7.
The Time Limit Exemption
99
A.
Stand-Alone Status of CAS PEs
99
B.
Beginnings
102
C.
Pre-design and Fabrication Outside the Source Country Does Not Count
103
D.
Tacking of the Time Spent by Subcontractors
104
E.
When Do Projects End? Interruptions and Post-Completion Work
108
3.8.
The Geographic Limits -- Stand-Alone Projects vs Aggregation
109
3.9.
Construction Projects Absent Treaty Provisions
113
ch. 4
Special Provisions for Mineral Extraction
115
4.1.
`Mine'
115
4.2.
`Oil or Gas Well'
116
4.3.
`Quarry'
117
4.4.
`Other Place of Extraction of Natural Resources'
117
4.5.
Relation to Business Activity Requirement
118
4.6.
Operations in Contiguous Waters
118
A.
Area of Operations
119
B.
Subjects of the Provision
120
C.
Stand-Alone vs Aggregated Offshore Drilling Projects
121
D.
Bareboat Leasing and Renting
123
ch. 5
Agency Permanent Establishments
125
5.1.
Agency Permanent Establishments -- The Parameters
125
A.
Exempt Preparatory and Auxiliary Activities
127
B.
No Fixed Place of Business Needed
127
5.2.
Agency Distinguished from Principal to Principal Dealings
129
A.
Principals and Their Activities
131
5.3.
Dependent vs Independent Agents
133
A.
Historical Evolution of the Concept
134
B.
Legal Independence
137
C.
Economic Independence
140
D.
The Clause 5 vs 6 Gap
143
5.4.
Authority to Conclude Contracts
144
A.
General vs Specific Authority
145
B.
Authority in Respect of Conduct of the Business Proper
149
C.
Apparent and Implied Authority
150
D.
Regular Exercise of Authority
152
E.
Non Authorized Employees and Representatives
153
5.5.
Acting in the Ordinary Course of Their Business
154
A.
Degree and Nature of Agent's Authority
155
B.
Acting in Ordinary Course
155
5.6.
Particular Agents
160
A.
Managing Agents
160
B.
Brokers and General Commission Agents
160
1.
Securities Brokers
161
2.
General Commission Agents
162
C.
Purchasing Agents
164
D.
Insurance Agents
165
E.
Delivery Agents
167
5.7.
Commissionaires and the Relationship Between Independent Agents and Agency PEs
170
A.
The Stand-Alone Status of the Independent Agent Exception
175
5.8.
Parent and Subsidiary
177
ch. 6
Preparatory and Auxiliary Activities and Places
183
6.1.
`Storage'
186
6.2.
`Display'
187
6.3.
`Delivery'
188
6.4.
`Goods or Merchandise'
189
6.5.
`Maintenance of a Stock of Goods or Merchandise'
189
6.6.
`Processing'
190
6.7.
`Purchasing'
191
6.8.
`Collecting Information'
192
6.9.
`Preparatory' or `Auxiliary' Activities
193
6.10.
Representative offices
196
6.11.
Combination of Activities
198
ch. 7
Permanent Establishments -- Services and Secondments
201
7.1.
An Introduction to Service PEs
201
7.2.
The Services PE Provisions
202
A.
UN Model Provision
202
B.
Optional OECD Commentary Provisions
202
7.3.
Criticism of Services PE Provisions
204
7.4.
Prevalence of Service PE Provisions
207
7.5.
Interpretation of the Services PE Provision
208
A.
The Meaning of `Services'
208
B.
Services to be Rendered `in' the Source State
209
C.
The Time Test
212
D.
Individuals Providing the Services -- Secondment and Independent Contractor Issues
216
E.
Same Project or Connected Projects
226
ch. 8
Tax in the Cloud -- The Permanent Establishment Concept and the Digital Economy
231
8.1.
Background
231
8.2.
Overview of Previous OECD Work on e-Commerce
234
8.3.
Additional Guidance on e-Commerce
239
A.
OECD Guidance on e-Commerce
239
B.
Case Law Guidance on e-Commerce
242
C.
Implications for Cloud Computing
245
8.4.
The Way Forward
246
A.
Overview of Base Erosion and Profit Shifting (BEPS)
246
B.
Addressing the Challenges of the Digital Economy
247
C.
Summary of the Potential Options to Address the Broader Tax Challenges Raised by the Digital Economy
249
ch. 9
PE Issues Arising from Centralized Tax Models
251
9.1.
Introduction
251
A.
Centralized Operating Models
252
1.
Manufacturing
254
2.
Sales
254
3.
Development
255
4.
Shared Services
256
5.
Service Companies
256
6.
Procurement Companies
256
B.
Common Issues Associated with Centralized Models
256
1.
Binding of the Principal by the Local Entity: Legal vs Economic Binding
257
2.
Creation of Dependent Agents
258
3.
Full Business Cycles
259
4.
Auxiliary Activities
261
5.
Services
263
C.
Design Implications of Article 5
264
1.
Generic Design Implications
264
2.
Specific Design Implications: Manufacturing and Sales
268
3.
Manufacturing
268
4.
Sales
269
9.2.
Conclusions
270
ch. 10
Permanent Establishment and Partnerships
271
10.1.
Limited Partnerships
272
A.
Common Law Countries
272
B.
Civil Law Countries
273
C.
Partnerships and Trusts as Limited Partners (Tiering)
275
10.2.
Natural Resource Partnerships
277
10.3.
Non-Trading Partnerships
278
10.4.
What is a Partnership?
279
Bibliography
285
Double-Taxation Conventions
285
Books and Key Articles
286
Table of Cases
289
Index
293