Nexus requirements for taxation of non-residents' business income : a normative evaluation in the context of the global economy / Stjepan Gadžo.

Format:

Book

Author/Creator:

Gadžo, Stjepan, author.

Series:

Doctoral series ; 41.

IBFD doctoral series ; 41

Language:

English

Subjects (All):

Income tax--Law and legislation.

Income tax.

Income tax--Foreign income.

Double taxation.

Physical Description:

1 online resource (409 pages) : illustrations.

Edition:

1st ed.

Place of Publication:

Amsterdam, The Netherlands : IBFD, 2018.

Summary:

This book contains a critical evaluation of the nexus requirements for the taxation of non-residents' business income enshrined in the current rules of international tax law and provides a proposal that is more aligned with international tax policy benchmarks.

Contents:

Cover

Title

IBFD Doctoral Series

Copyright

Acknowledgements

Preface

Chapter 1: General Introduction

1.1. Background to the problem

1.2. Aim of the book

1.3. Relevance of the research

1.4. Methodology

1.5. Delimitations of the research

1.6. Outline of the book

1.7. Terminology

Chapter 2: Legal Fundamentals of Income Tax Jurisdiction

2.1. State jurisdiction under international law

2.1.1. State sovereignty: The Bedrock principle of international law

2.1.2. Jurisdiction as an aspect of state sovereignty

2.1.3. Principles of jurisdiction: Lotus doctrine as a starting point

2.1.4. Principles of jurisdiction: Customary international law

2.1.5. "Sufficient connection" requirement

2.2. General international law of tax jurisdiction

2.2.1. Notion of tax jurisdiction

2.2.2. Theory of "unlimited" tax jurisdiction

2.2.3. Excursus: A sovereign state as a "tax state"

2.2.4. Tax nexus as a prerequisite for the exercise of substantive income tax jurisdiction: A review of the literature

2.2.5. Finding evidence of customary law of income tax jurisdiction

2.2.6. Is the nexus requirement a norm of customary international law?

2.2.6.1. Tax treaties as a starting point

2.2.6.2. Domestic income tax law: Proving opinio juris

2.2.6.2.1. Justification to tax as the main issue

2.2.6.2.2. Justification to tax on an international plane

2.2.6.3. Domestic case law: Confirming the status of the nexus requirement

2.2.7. Does customary international law define the criteria reflecting a nexus?

2.2.7.1. Nationality criterion

2.2.7.1.1. Nationality of natural persons (individuals)

2.2.7.1.2. Nationality of juristic persons

2.2.7.2. Residence criterion

2.2.7.2.1. Residence of natural persons

2.2.7.2.2. Residence of juristic persons

2.2.7.3. Source criterion.

2.2.7.3.1. Source rules and customary international law

2.3. Summary

Chapter 3: Nexus Requirements in Domestic Tax Law

3.1. Preliminary remarks

3.1.1. Why a domestic law perspective?

3.1.2. Clarification of the unit of comparison: On the notion of "business income"

3.1.3. Selection and grouping of countries

3.2. Model 1: Usage of the PE concept as defined intax treaty models

3.2.1. An illustration: Taxation of non-residents' business income in Croatia

3.2.1.1. PE concept in the Croatian Profit Tax Act

3.2.1.2. Special rules on services income

3.2.1.3. Taxation of business income of non-resident individuals under the Income Tax Act

3.3. Model 2: Usage of the PE concept defined substantially different than in tax treaty models

3.3.1. An illustration: PE concept under German tax law

3.3.1.1. PE concept in the German Fiscal Code

3.3.1.2. Usage of "permanent representatives" by non-residents: Secondary nexus test

3.3.1.3. Special rules for professional services

3.4. Model 3: General irrelevance of a fixed place of business

3.4.1. Taxation of foreign taxpayers' business income under US domestic law

3.4.1.1. What is "income effectively connected with a US trade or business (ECI)"?

3.4.2. Taxation of non-residents under Indian domestic law

3.4.2.1. What is "business connection in India"?

3.4.2.2. Special rules for fees for technical services

3.5. Model 4: Reliance on withholding tax at source

3.5.1. Taxation of non-residents' business income under Brazilian domestic law

3.5.1.1. Taxation of non-resident legal entities: Cases of carrying on business via Brazilian branches, agents and business units

3.5.1.2. Taxation of non-resident legal entities: Withholding regime

3.6. Summary

Chapter 4: Nexus Requirements in Tax Treaty Law

4.1. Preliminary remarks.

4.1.1. Clarifying the notion and purpose of tax treaties

4.1.2. Model tax treaties and the influence of the OECD Model

4.1.3. Interpretation of tax treaties

4.2. Allocation of rights to tax business income under the OECD Model: Use of the PE nexus

4.3. Article 5 of the OECD Model: Definition of the PE concept in a tax treaty context

4.4. Policy behind the use of the PE nexus

4.5. Clarification of PE requirements in DTTs based on the OECD Model

4.5.1. Requirements for a basic rule PE: Article 5(1) of the OECD Model

4.5.1.1. When does a place of business exist?

4.5.1.2. When is a place of business "fixed"?

4.5.1.2.1. Geographic element: The location test

4.5.1.2.2. Temporal element: The duration test

4.5.1.3. When is the taxpayer's business carried on "through the fixed place"?

4.5.1.4. The control test: The taxpayer's power of disposal over a place of business

4.5.1.5. Alternative classification of the elements inherent to the basic rule PE

4.5.2. Requirements for an "agency PE": Article 5(5) and article 5(6) of the OECD Model

4.5.2.1. Subjective scope of the agency PE rule

4.5.2.2. What kind of agent activity is sought?

4.5.2.2.1. Agent's authority to conclude contracts in the name of the taxpayer's enterprise

4.5.2.2.2. Habitual exercise of agent authority

4.5.2.3. Who are "independent agents"?

4.5.2.3.1. Legal and economic independence of the agent

4.5.2.3.2. Acting in the ordinary course of business

4.5.2.4. Alternative classification of the elements inherent to the agency PE: Skaar's analysis

4.6. Deviations from the OECD PE definition in tax treaty practice

4.6.1. Services PEs

4.6.1.1. Services PEs in the UN Model

4.6.1.2. Services PEs in the OECD Commentary

4.6.1.3. Services PEs in treaty practice

4.6.2. Insurance PEs.

4.6.3. Some other deviations from the OECD Model: The "substantial equipment PE" and the "offshore PE"

4.6.4. Requirement for a fixed base: The former article 14of the OECD Model

4.7. Alternative nexus requirements in the OECD Model

4.7.1. Income derived from international traffic: Article 8 of the OECD Model

4.7.2. Directors' fees: Article 16 of the OECD Model

4.7.3. Income of artistes and sportsmen: Article 17 of the OECD Model

4.7.4. Use of a special "time threshold" for income related to personal services: Article 14(1)(b) of the UN Model

4.8. Summary

Chapter 5: Setting the Framework for Normative Analysis

5.1. Tax equity

5.1.1. Starting point: Tax equity in a domestic setting

5.1.2. Equity in an international context: Inter-taxpayer vs inter-nation equity

5.1.3. Role and content of inter-nation equity

5.1.4. What does tax equity require in relation to the nexus issue?

5.2. Tax efficiency

5.2.1. Benchmarks of tax efficiency in an international setting

5.2.2. What does tax efficiency require in relation to the nexus issue?

5.3. Administrability

5.3.1. Administrability in the international arena and the nexus issue

5.4. Summary

Chapter 6: Nexus Norms in the Context of the Global Economic Environment

6.1. The interaction between globalization and a "tax state"

6.2. At the heart of the problem: Usage of time-honoured nexus norms in the new economic landscape

6.3. Cross-border trade in services

6.3.1. Types of cross-border service and the tax nexus issue

6.3.1.1. Second type of cross-border service: "Consumption abroad"

6.3.1.2. First type of cross-border service: "Cross-border trade"

6.3.1.3. Third type of cross-border service: "Commercial presence"

6.3.1.4. Fourth type of cross-border service: "Presence of natural persons".

6.3.2. Growth in cross-border services supply as a challenge for current nexus norms: A policy perspective

6.4. Advent and expansion of electronic commerce

6.4.1. E-commerce and the nexus issue

6.4.2. Application of nexus requirements embodied in international tax law de lege lata to the taxation of e-commerce income

6.4.2.1. Tax treaty law level

6.4.2.2. Domestic law level

6.4.3. Policy perspective: Is there a need for a new nexus in the context of the digital economy?

6.5. Proliferation of multinational companies

6.5.1. Why do MNCs exist?

6.5.2. Taxation of MNCs' profits as the focal point of academic and policy debates

6.5.3. MNCs' tax planning and the nexus issue

6.5.3.1. Commissionaire arrangements

6.5.3.2. Fragmentation of MNCs' activities in source countries

6.5.4. Policy perspective: Misalignment between the PE nexus and MNCs' business activities

6.6. Summary

Chapter 7: Evaluation of Nexus Norms De Lege Lata and Reform Proposals on the Basis of Normative Standards

7.1. Appropriateness of the PE nexus

7.1.1. Normative evaluation of the PE nexus as defined in the OECD Model Tax Convention

7.1.1.1. Equity perspective

7.1.1.2. Efficiency perspective

7.1.1.3. Administrability perspective

7.1.2. Significance of other PE definitions

7.1.2.1. Examination of the services PE clause

7.1.2.2. Examination of domestic PE definitions

7.2. Appropriateness of other nexus requirements de lege lata

7.2.1. Relevance of broad domestic concepts such as "income effectively connected with a US trade or business" or "business connection in India"

7.2.2. Relevance of withholding tax imposed under the domestic laws of some countries

7.3. Analysis of reform proposals.

7.3.1. First option: A modest redefinition of the PE nexus in tax treaty law as envisaged in the OECD Base Erosion and Profit Shifting (BEPS) Project.

Notes:

Originally presented as the author's thesis (doctoral--Sveučilište u Zagrebu, 2016).

Includes bibliographical references (page [339]-385).

Description based on print version record.

Description based on publisher supplied metadata and other sources.

ISBN:

90-8722-449-4

OCLC:

1041512540