The first semester of 2018 has witnessed notable – if not unprecedented – activity in the area of tax policy, in the EU as well as internationally. The wind of change tha we sense in international taxation the last decade is evidently becoming stronger and stronger, while its direction remains largely undefined. The CFE Tax…
Introduction One of the advantages multinational groups enjoy over standalone companies is that their members have access to each other’s resources (such as, e.g., funding). In particular, less capable entities can boost their credibility if a related entity provides them with a performance guarantee, i.e., pledges to fulfill their contractual obligations in case they fail…
What the UK government wants by way of Brexit outcome seems to change daily, with the government and political parties in Parliament divided among various factions. The only legal certainty about Brexit is that unless the UK and the remaining member states agree otherwise, EU law will cease to apply in the UK after 29…
On July 13, 2018, India’s Central Board of Direct Taxes (CBDT) issued for stakeholders’ comments a consultation document on framing of tax rules in respect of the concept of “significant economic presence” – a recent addition to the Indian Income Tax jurisprudence. Readers will recollect that India’s 2018 Budget proposed to amend the definition of…
A recent decision of the Spanish Supreme Court, of February 26, 2018, in the civil law jurisdiction, may have an unexpected effect on the composition of the boards of directors of the Spanish subsidiaries of multinational groups. The practical effects for Spanish based groups with minority shareholders, where the role of directors is critical, could…
Introduction One of the most controversial topics of transfer pricing, in today’s multinational world, is the pricing of intercompany financial transactions. The 2017 OECD transfer pricing guidelines (TPG) lack clear rules specifically tailored to financial transactions, which can lead to a higher risk of divergent treatment of these transaction between tax administrations and taxpayers and…
The Existing Framework: Nexus and Profit Attribution Rules Under the current Double Taxation Avoidance Agreement (DTAA) framework, business profits are in principle taxable in the State of residence of the enterprise. However, the source (market) jurisdictions may tax the profits if a permanent establishment (PE) is triggered therein. A PE arises when the non-resident operates…
We are happy to inform you that the latest issue of the journal is now available and includes the following contributions: Marie Lamensch, Adoption of the E-Commerce VAT Package: The Road Ahead Is Still a Rocky One The e-commerce VAT package that was adopted in December 2017 is a key element of the European…
Being familiar with the Spanish tax environment, readers will know that Spain does not withhold taxes on interest paid to EU residents. This domestic exemption has been in force for several decades, long before the EU Interest and Royalties Directive. The domestic exemption has the beauty of simplicity: it applies to all EU-resident lenders, without…
I am delighted to see that my post on value creation has stimulated discussion on the fundamental thinking about international taxation. See the posts of my friends and colleagues Werner Haslehner and Sergio André Rocha. At the IFA seminar in Rotterdam, we puzzled over the meaning of “value creation”. Werner also referred to another mystifying…
The well-known expression “butterfly effect” comes from chaos theory, and it refers to the idea that a butterfly could flap its wings in Brazil and, through ripple effect, set off a tornado in Texas. Bringing this expression into the tax world, a decision by a domestic court on a seemingly domestic tax matter could trigger…
For many years, I have been advocating a drastic change in the distribution approach for taxing rights in international taxation. The focus of my criticism has been Article 7 of the OECD and UN Model Conventions. My core argument continues to be that the so-called “permanent establishment principle” disregards the role of the infrastructure that…
Intertax dedicates this special issue to digital taxation, aiming to contribute to the ongoing debate on the topic. The reader will find herein the entire range of existing positions, discussed comprehensively. The OECD Interim Report 2018 and the EU proposals on digital taxation are already taken into account in some of these articles. After the…
Economic development has been historically associated with the fulfilment of two major conditions: a) Peace and b) low taxation. Peace was the necessary component for prosperity from the point of view of foreign policy. Empires, kingdoms, duchies, principalities and republics have been prosperous only as long as there has been peace. Low taxation was the…
