The 2010 OECD updates : model tax convention & transfer pricing guidelines : a critical review / edited by Dennis Weber, Stef van Weeghel.
2011
K4542.A6 A13 2011 (Map It)
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Title
The 2010 OECD updates : model tax convention & transfer pricing guidelines : a critical review / edited by Dennis Weber, Stef van Weeghel.
Published
Alphen aan den Rijn : Kluwer Law International, [2011]
Distributed
Frederick, Md : Sold and distributed in North, Central and South America by Aspen Publishers
Copyright
©2011
Call Number
K4542.A6 A13 2011
ISBN
9789041138125 (cloth : alk. paper)
9041138129 (cloth : alk. paper)
9041138129 (cloth : alk. paper)
Description
xv, 227 pages : illustrations ; 25 cm.
System Control No.
(OCoLC)758779911
Note
"Wolters Kluwers Law & Business."
This book contains all subjects discussed, and a compilation of papers written following the panels and discussions that took place during the ACTL (Amsterdam Centre for Tax Law) Seminar , "The 2010 update to the OECD MC and the revised Transfer Pricing guidelines," Amsterdam, 19 November 2011 [sic].
This book contains all subjects discussed, and a compilation of papers written following the panels and discussions that took place during the ACTL (Amsterdam Centre for Tax Law) Seminar , "The 2010 update to the OECD MC and the revised Transfer Pricing guidelines," Amsterdam, 19 November 2011 [sic].
Bibliography, etc. Note
Includes bibliographical references.
Record Appears in
Variant Title
2010 Organisation for Economic Co-operation and Development updates
Model tax convention and transfer pricing guidelines
Model tax convention and transfer pricing guidelines
Portion of Title
Model tax convention & transfer pricing guidelines
Table of Contents
Preface
xvii
pt. I
Introduction
1
ch. 1
The 2010 OECD MC Amendments and the Revised TP Guidelines: An Overview / Jan Gooijer
3
1.
Introduction
3
2.
Changes to Article 7 MC (Business Profits)
4
2.1.
Historical Background
4
2.2.
The Distributive Rule of Article 7, Paragraph 1
4
2.3.
Attributable Profits: Article 7, Paragraph 2, MC
5
2.4.
Adjustment of Profit Attribution in Case of Double Taxation (Article 7, Paragraph 3, MC)
7
2.5.
Rule of Interpretation (Article 7, Paragraph 4, MC)
8
3.
Collective Investment Vehicles
9
4.
State-Owned Entities Including Sovereign Wealth Funds
11
5.
Application of Tax Treaties to International Telecommunication Operations
11
6.
(Short-Term) Employment
13
6.1.
Introduction
13
6.2.
Formal Approach
13
6.3.
Substance over Form
14
7.
2010 Transfer Pricing Guidelines
15
7.1.
Introduction
15
7.2.
Chapter I: The Arm's Length Principle
15
7.3.
Chapter II: Transfer Pricing Methods
15
7.4.
Chapter III: Comparability Analysis
16
7.5.
Chapter IX: Business Restructurings
16
pt. II
The new Article 7 of the OECD MC: Attribution of Profits to PE
19
ch. 2
Article 7 - New OECD Rules for Attributing Profit to Permanent Establishments / Mary Bennett
21
1.
Introduction
21
2.
Background on the Project on the Attribution of Profits to Permanent Establishments
22
3.
The `Authorized OECD Approach'
23
4.
Implementation of the AOA
24
5.
Issues Faced in Drafting the New Article 7
26
5.1.
Paragraph 1 of the New Article 7
27
5.2.
Paragraph 2 of the New Article 7
28
5.3.
Paragraph 3 of the New Article 7
29
5.4.
Elimination of Other Paragraphs
31
5.5.
Domestic Law Restrictions on the Deductibility of Expenses
31
5.6.
Notional Payments
32
6.
Implications of the New Article 7
34
7.
The 2010 Report on the Attribution of Profits to Permanent Establishments
36
8.
Conclusion
36
ch. 3
The 2010 Elimination of Article 7-3 (1963): Rise and Fall of an Article / Hans Pijl
37
1.
Introduction
37
2.
Article 7-3's Function
39
3.
The Three Cases
41
4.
The Scope of Article 7-3
44
5.
The Changes in 1977
45
6.
The 1994 Changes
46
7.
The Changes of 2008 and 2010
47
8.
Summary
49
ch. 4
Attribution of Profits to PE: A Business Perspective / Johan Muller
51
1.
Introduction
51
2.
A General Appraisal of the Tax Work Done by the OECD, in Particular the Committee on Fiscal Affairs
51
3.
Questions of the Day
53
3.1.
Which Differences Still Exist in Post-2010 Treaties between PEs and Subsidiaries Regarding Profit Determination and Arm's Length Dealing?
53
3.2.
Which Commentary Should a Court Read?
54
3.2.1.
The Status of Existing Commentaries to Tax Treaties
54
3.2.2.
The Status of New Commentaries to Pre-existing Tax Treaties
55
4.
Should the Court Also Read the Profit Attribution Report? What Is Its Legal Significance (If Any)?
57
5.
Which Capital Is Attributable to the PE?
57
6.
Do We Now Have Full Internal Interest, Rent, Fees and Royalties?
57
7.
Withholding Taxes on Such Notional Remunerations (Which Are Not `Payments')?
58
8.
Which State Should Follow Which State's Adjustments? Whichever Is Last in Auditing the Company?
59
9.
Practical Examples
59
10.
Management PEs
59
11.
Drill Ships
60
12.
Freight forwarder Service PEs?
61
pt. III
Tax Treaty Entitlement of CIVs
63
ch. 5
Characterization and Tax Treaty Issues of Collective Investment Vehicles: A Review of the OECD Report and the 2010 Amendments to the Model Tax Convention / Bruno da Silva
65
1.
Introduction
65
2.
The Relevance of CIVs and the Tax Policy
66
3.
Tax Treaty Issues
68
4.
The Definition of CIVs
70
5.
Claim of Tax Treaty Benefits by CIVs
71
5.1.
Preliminary Remarks
71
5.2.
CIV as a `Person'
71
5.3.
CIV as a `Resident'
73
5.4.
CIV as `Beneficial Owner' of the Income
75
6.
Tax Treaty Claim by Investors
79
7.
Double Tax Relief
80
8.
Conclusions
81
ch. 6
Suggested Treaty Benefits Approaches for Collective Investment Vehicles (CIVs) and Its Investors under the OECD MTC 2010 Update / Hein Vermeulen
83
1.
The Problem
84
2.
The Solutions
85
3.
Inclusion in the Tax Treaty of a Definition of the CIVs of the Contracting States
86
4.
The `In Its Own Right-Approach'
87
4.1.
Full Treaty Benefits
87
4.2.
Proportionate Treaty Benefits
89
4.2.1.
Extension to Other Contracting States
91
4.2.2.
Limitation to the Contracting States
92
4.2.3.
Threshold Consideration
92
5.
The `Look Through-Approach'
93
5.1.
The Basic `Look Through-Approach'
94
5.2.
Extension to Other Contracting States
94
5.3.
Risk of Abuse
96
6.
Compliance Considerations
96
6.1.
Assumption of Ownership
96
6.2.
Reasonable Proportionment Approach
97
6.3.
Publicly Traded CIVs
97
7.
Conclusion
98
ch. 7
The 2010 CIV-Report: A Comparison with the 1999 Partnership Report / Ton Stevens
101
1.
Introduction
101
2.
Comparison
102
2.1.
Procedure/Goal/Scope
102
2.2.
Definitions
104
2.3.
Treaty Entitlement
105
2.3.1.
General
105
2.3.2.
Person
105
2.3.3.
Resident
106
2.3.4.
Beneficial Owner
107
2.4.
Source State Perspective
108
2.5.
Residence State Perspective
110
3.
Conclusions
111
pt. IV
Income from Employment
113
ch. 8
Updates to the Commentary on Article 15 of the OECD Model - Thoughts on the Interpretation of the Term `employer' for Treaty Purposes / Walter Andreoni
115
1.
Introduction
115
2.
International Hiring Out of Labour
116
3.
The Update to the Commentary on Article 15 OECD MC
117
4.
A Formalistic Approach to the Definition of the Term `Employer'
119
5.
A Substantial Approach to the Definition of the Term `Employer'
121
6.
Conclusions
123
ch. 9
Some Selected Interpretation and Qualification Issues with Respect to Article 15(2)(b) and (c) of the OECD Model / Frank P.G. Potgens
125
1.
Introduction
125
2.
Paragraph 8 of the 1992--2008 Commentary on Article 15
126
3.
Some General Features of the 2010 Commentary on Article 15 of the OECD Model
127
4.
Interpretation
128
4.1.
Distinction between Formal and De Facto Employer
128
4.2.
Formal Employer
129
4.3.
De Facto Employer
129
4.4.
Evaluation of Interpretation Method as Regards De Facto Employer
131
5.
Interpretation Conflicts and Qualification Conflicts
133
5.1.
General
133
5.2.
The 2010 Commentary on Article 15 of the OECD Model as Regards Qualification and Interpretation Conflicts
135
6.
`Paid by, or on Behalf of' (Article 15(2)(b) of the OECD Model)
137
6.1.
General
137
6.2.
2010 Commentary on Article 15 of the OECD Model
137
7.
`Borne by' (Article 15(2)(c) of the OECD Model)
140
7.1.
General
140
7.2.
The Meaning of Borne by according to the Commentary on Article 15(2)(c) of the OECD Model
140
8.
Conclusion
142
pt. V
The Revised Transfer Pricing Guidelines
145
ch. 10
The 2010 update to the OECD Transfer Pricing Guidelines / Caroline Silberztein
147
1.
The Arm's Length Principle and the TPG
147
2.
Structure and Contents of the TPG
148
3.
An Extensive Consultation Process
149
4.
New Guidance on Comparability (Chapter III)
149
5.
Putting Comparability Analysis into Perspective
151
6.
New Guidance on the Selection of the `Most Appropriate Method to the Circumstances of the Case' (Chapter II)
153
7.
New Guidance on the Application of Transactional Profit Methods (Chapter II)
154
8.
New Guidance on the Application of the Arm's Length Principle to Business Restructurings (Chapter IX)
154
9.
Conclusion: Way Forward
159
ch. 11
Chapters I and III of the 2010 OECD Guidelines: Capita Selecta / Antonio Russo
161
1.
General
161
2.
Chapter I: The Arm's Length Principle, `Reloaded'
163
3.
Chapter III: More on Comparability Analysis
165
4.
Conclusive Remarks
169
ch. 12
OECD Revision of Chapters I-III and IX of the Transfer Pricing Guidelines: Some Comments on Hierarchy of Methods and Re-characterization of Actual Transactions Undertaken / Guglielmo Maisto
173
1.
Introduction
173
2.
Hierarchy of Methods
175
2.1.
Description of the Changes
175
2.2.
The Procedure for Selecting the Methods
177
2.3.
Trends in the Use of Profit Methods
178
3.
The New Chapter IX and the Guidance on Recognition of Actual Transaction Undertaken
179
3.1.
The Exceptional Cases in Which the Tax Authority Have the Ability to Disregard a Transaction
179
3.2.
The Government Exceptional Re-characterization Powers and the Domestic Provisions' Legal Base
181
pt. VI
Sovereign Wealth Funds
183
ch. 13
How to Treat(y) Sovereign Wealth Funds? The Application of Tax Treaties to State-owned Entities, Including Sovereign Wealth Funds / Stijn Janssen
185
1.
Introduction
185
2.
Sovereign Wealth Funds: Spreading Their Wealth
187
3.
MTC: `State and Any Political Subdivision or Local Authority Thereof'
189
4.
Commentary on Article 1 MTC
190
5.
Commentary on Article 4 MTC
196
5.1.
Definition of SWF: Integral Part of the State?
196
5.2.
Liable to Tax
200
5.3.
Object of the Treaty
201
5.4.
Scope of the Treaty
202
5.5.
Liable versus Subject to Tax
202
6.
Commentary on Article 10 MTC
205
7.
Commentary on Article 11 MTC
206
8.
Conclusion: International Tax and the Position of SWF
207