Double Taxation Conventions And The Use Of Conduit Companies Pdf

double taxation conventions and the use of conduit companies pdf

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Letter from the Editor.

This decision follows recent decisions of the Korean Supreme Court on the meaning of the same term in Korean double tax treaties with Hungary and Ireland. Beneficial ownership, a term imported into tax treaties from common law, has been the source of much controversy. In that case, the court was required to interpret the term in the Indonesia-Mauritius double tax treaty. Tax administrations in a number of countries subsequently sought to challenge entitlement to treaty benefits based on a lack of beneficial ownership, with litigation often ensuing. This controversy ultimately resulted in the OECD consultation for revised Commentary on the meaning of beneficial ownership in articles 10,11 and 12 of the Model.

Tax Treaty Interpretation by Supreme Courts: Case Study of CFC Rules

In the event of abuse, the Netherlands therefore refuses, for example, to grant an exemption from withholding tax on dividends resulting from Article 5 PSD, which is implemented in Section 4 2 DWTA. At present, these provisions are subject to a number of conditions in the form of substance requirements.

The Deputy Minister does not consider Dutch law to be in line with the February 26 judgments on this point. Therefore, on Budget Day, amendments to dividend withholding tax and corporate income tax will be proposed, which will take effect as of January 1, The planned amendments will mean that the substance requirements are only relevant for the division of the burden of proof.

These amendments will apply to linking intermediate holding companies established elsewhere in the EU as well as in a third country. Nevertheless, the Deputy Minister does not expect that the Dutch tax authorities will be much more often able to successfully take the position that there is abuse, because he believes there is sufficient overlap between the Dutch substance requirements and the indications of abuse in the CJEU judgment.

This includes situations in which, for example, the EUR , payroll costs are disproportionate to the amount of dividends, interest and royalties received and paid by the intermediary, or situations in which the intermediary very quickly passes on the dividends, interest and royalties received. Furthermore, the bill to be submitted on Budget Day for conditional withholding taxes on interest and royalties expected effective date January 1, will also be amended as a result of the February 26 judgments.

Finally, the Deputy Minister does not see any State aid risk due to the application of the withholding exemption, because there is no selective advantage. The idea seems to be that the same conditions apply to all taxpayers. Therefore, according to the Deputy Minister, the extent to which the judgment could have consequences for the participation exemption needs to be studied in more detail.

Existing rulings that have been issued in situations where the substance requirements have been met, but that qualify as abuse under the new legislation, will lapse as of January 1, After all, there is in that case an amendment of the law that is relevant to the ruling.

As previously discussed, the Deputy Minister does not expect that the Dutch tax authorities will much more often be successfully able to take the view that abuse has occurred.

The Deputy Minister therefore confirms that taxpayers can continue to rely on existing rulings for their remaining term, unless the Dutch tax authorities inform the taxpayer that they will lapse. However, this does not apply to similar tax treaty benefits.

The Deputy Minister therefore believes that these are independent of EU law. It consequently remains possible to invoke tax treaty benefits, such as the 2. According to the Deputy Minister, if a principal purpose test PPT is included in a tax treaty, the national courts are not bound by a CJEU judgment when interpreting this provision. Judgments by the CJEU may however have an impact on the interpretation by the national courts.

Finally, according to the Deputy Minister, the beneficial ownership rules in the tax treaties concluded by the Netherlands will be interpreted in accordance with the most recent OECD Commentary.

All in all, according to the Deputy Minister, the February 26 judgments have only limited consequences for the Netherlands. Your Meijburg advisor can inform you about the exact consequences for your tax structure. All rights reserved. Breadcrumb Home News Answers to parliamentary questions about conduit companies. Answers to parliamentary questions about conduit companies June 18, Ruling practice Existing rulings that have been issued in situations where the substance requirements have been met, but that qualify as abuse under the new legislation, will lapse as of January 1, Click here to download the memorandum in pdf format Answers to parliamentary questions about conduit companies jun

Treaty shopping and prevention in a post-BEPS world: Part I

In the event of abuse, the Netherlands therefore refuses, for example, to grant an exemption from withholding tax on dividends resulting from Article 5 PSD, which is implemented in Section 4 2 DWTA. At present, these provisions are subject to a number of conditions in the form of substance requirements. The Deputy Minister does not consider Dutch law to be in line with the February 26 judgments on this point. Therefore, on Budget Day, amendments to dividend withholding tax and corporate income tax will be proposed, which will take effect as of January 1, The planned amendments will mean that the substance requirements are only relevant for the division of the burden of proof.


Model Tax Convention on Income and on Capital (Full Version). image of Model Buy Print+PDF (US$). USD. BUY PDF (US$). Chapter. Double Taxation Conventions and the Use of Conduit Companies.


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This paper investigates the effects of double tax treaties DTTs on foreign direct investment FDI after controlling for their relevance in the presence of treaty shopping. DTTs cannot be considered a bilateral issue, but must be viewed as a network. We define tax distance as the cost of channelling corporate income from one country to another and, by considering treaty shopping through intermediate jurisdictions, we calculate the shortest i. Traditionally, double tax treaties DTTs served as an important policy tool to promote international economic activity by preventing international double taxation.

Judgment of the Court Grand Chamber of 26 February Digital reports Court Reports - general - 'Information on unpublished decisions' section. The disputes in the main proceedings and the questions referred for a preliminary ruling. Lenaerts, President, J. Bonichot, A.

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