Fundamentals of International
Taxation
TAX4010
Year 2019/2020
,Table of Contents
Tutorial 2 Introduction to Tax Treaty Law....................................................................................................... 4
Case 1...................................................................................................................................................................5
Case 2...................................................................................................................................................................9
Case 3.................................................................................................................................................................11
Case 4.................................................................................................................................................................13
Case 5.................................................................................................................................................................15
Case 6.................................................................................................................................................................16
Tutorial 3 Residency Status.......................................................................................................................... 17
Case 1.................................................................................................................................................................17
Case 2.................................................................................................................................................................20
Case 3.................................................................................................................................................................23
Case 4.................................................................................................................................................................25
Case 5.................................................................................................................................................................27
Tutorial 4 Nexus for Business Taxation in Double Tax Conventions...............................................................29
Case 1.................................................................................................................................................................29
Case 2.................................................................................................................................................................32
Case 3.................................................................................................................................................................35
Case 4.................................................................................................................................................................37
Case 5.................................................................................................................................................................40
Tutorial 5 Nexus for Business Taxation in Double Tax Conventions (cont.)....................................................43
Case 1.................................................................................................................................................................43
Case 2.................................................................................................................................................................50
Case 3.................................................................................................................................................................54
Case 4.................................................................................................................................................................57
Tutorial 6 Juridical Double Taxation and methods to avoid it........................................................................60
Case 1.................................................................................................................................................................60
Case 2.................................................................................................................................................................63
Case 3.................................................................................................................................................................69
Case 4.................................................................................................................................................................73
Case 5.................................................................................................................................................................75
Tutorial 7 Economic Double Taxation and methods to avoid it/Combined situations of Economic and Juridical
Double Taxation........................................................................................................................................... 78
Case 1.................................................................................................................................................................78
Case 2.................................................................................................................................................................85
,Case 3.................................................................................................................................................................89
Case 4.................................................................................................................................................................91
, Tutorial 2 Introduction to Tax Treaty Law
Article Kees van Raad: Five Fundamental Rules in Applying Tax Treaties:
1 – Tax Treaties Restrict the Application of Internal Tax Law: Tax liability is established by
domestic law, so when signing a treaty states are agreeing to limits to their taxing rights. If a
treaty does not allow for the taxation of an amount which would be taxed in domestic law,
the result is no taxation in this state. If, on the other hand, the treaty allocated taxing rights
to one state but this state’s domestic law does not prescribe the taxation of this income,
there will also not be taxation in the state, since there is no domestic tax liability.
Furthermore, as a result of a tax treaty a source state may be taxing less than what is
prescribed on its domestic law, while the residence state will collect less income by relieving
double taxation.
2 – Tax Terms may Have Quite Different Meaning in Internal Tax Law and In Tax Treaties:
Treaties have their own definitions, e.g. articles 3,4 and 5, and these might be different than
the same terms in domestic law, so it is important to assess the treaty meaning of a term.
3 – Core Notions in a Tax Treaty’s Distributive Rules: The treaties define the resident state
based on article 4, but there is no uniform rule for the other state, there are different source
rules throughout the convention.
4 – The Scope of Distributive Rules: In some situations, income can fall under the scope of
more than one tax treaty provision, so it is important to assess which one should be applied.
Also, there are rules that have worldwide reach and others that are bilateral.
5 – A Treaty’s Distributive Rules Generally Do Not Deal With The Question To Which Person
The Item of Income Is To Be Taxed: The articles establish different connections between the
income and the taxpayer
Taxation
TAX4010
Year 2019/2020
,Table of Contents
Tutorial 2 Introduction to Tax Treaty Law....................................................................................................... 4
Case 1...................................................................................................................................................................5
Case 2...................................................................................................................................................................9
Case 3.................................................................................................................................................................11
Case 4.................................................................................................................................................................13
Case 5.................................................................................................................................................................15
Case 6.................................................................................................................................................................16
Tutorial 3 Residency Status.......................................................................................................................... 17
Case 1.................................................................................................................................................................17
Case 2.................................................................................................................................................................20
Case 3.................................................................................................................................................................23
Case 4.................................................................................................................................................................25
Case 5.................................................................................................................................................................27
Tutorial 4 Nexus for Business Taxation in Double Tax Conventions...............................................................29
Case 1.................................................................................................................................................................29
Case 2.................................................................................................................................................................32
Case 3.................................................................................................................................................................35
Case 4.................................................................................................................................................................37
Case 5.................................................................................................................................................................40
Tutorial 5 Nexus for Business Taxation in Double Tax Conventions (cont.)....................................................43
Case 1.................................................................................................................................................................43
Case 2.................................................................................................................................................................50
Case 3.................................................................................................................................................................54
Case 4.................................................................................................................................................................57
Tutorial 6 Juridical Double Taxation and methods to avoid it........................................................................60
Case 1.................................................................................................................................................................60
Case 2.................................................................................................................................................................63
Case 3.................................................................................................................................................................69
Case 4.................................................................................................................................................................73
Case 5.................................................................................................................................................................75
Tutorial 7 Economic Double Taxation and methods to avoid it/Combined situations of Economic and Juridical
Double Taxation........................................................................................................................................... 78
Case 1.................................................................................................................................................................78
Case 2.................................................................................................................................................................85
,Case 3.................................................................................................................................................................89
Case 4.................................................................................................................................................................91
, Tutorial 2 Introduction to Tax Treaty Law
Article Kees van Raad: Five Fundamental Rules in Applying Tax Treaties:
1 – Tax Treaties Restrict the Application of Internal Tax Law: Tax liability is established by
domestic law, so when signing a treaty states are agreeing to limits to their taxing rights. If a
treaty does not allow for the taxation of an amount which would be taxed in domestic law,
the result is no taxation in this state. If, on the other hand, the treaty allocated taxing rights
to one state but this state’s domestic law does not prescribe the taxation of this income,
there will also not be taxation in the state, since there is no domestic tax liability.
Furthermore, as a result of a tax treaty a source state may be taxing less than what is
prescribed on its domestic law, while the residence state will collect less income by relieving
double taxation.
2 – Tax Terms may Have Quite Different Meaning in Internal Tax Law and In Tax Treaties:
Treaties have their own definitions, e.g. articles 3,4 and 5, and these might be different than
the same terms in domestic law, so it is important to assess the treaty meaning of a term.
3 – Core Notions in a Tax Treaty’s Distributive Rules: The treaties define the resident state
based on article 4, but there is no uniform rule for the other state, there are different source
rules throughout the convention.
4 – The Scope of Distributive Rules: In some situations, income can fall under the scope of
more than one tax treaty provision, so it is important to assess which one should be applied.
Also, there are rules that have worldwide reach and others that are bilateral.
5 – A Treaty’s Distributive Rules Generally Do Not Deal With The Question To Which Person
The Item of Income Is To Be Taxed: The articles establish different connections between the
income and the taxpayer
