IMP schemes (EXAM SCHEMES)

Cases involving IMP connected to an enterprise

A. IMP situated in the other contracting state (bilateral situations)
1. IMP of an enterprise (resident) of a contracting state which is NOT attributable to a PE:




 DTC: R-S
o Art. 7 does NOT apply since Art. 7(4) gives precedence to Art. 6
o Source state may tax -> Art. 6
2. IMP of an enterprise (resident) of a contracting state which FORMS a PE in the situs state:




 DTC: R-S
o Art. 7(2) applies. NO need to go to 7(4)!!
o According to the AOA, the IMP will form part of the PE’s assets
o Art. 6 does NOT apply -> the income derived by the PE will fall under Art. 7(2) instead
3. IMP of an enterprise (resident) of a contracting state which is attributable to a PE:




 DTC: R-S
o The income derived from the IMP is attributed to the PE (under the AOA)
 Hence, the IMP forms part of the PE’s assets
o Due to the application of Art. 7(4) + Art. (6)(3) the source state may tax under Art. 6
o Art. 7 does NOT apply
4. IMP of an enterprise (resident) of a contracting state NOT attributable to a PE (in State S):




 DTC: R-S