Class notes Cross Border Taxation Of Human Capital (TAX4009)

Week 1. International taxation of cross-border employment


Literature:

 Treatise, Vogel, A. Regarding Art. 15(1) and (2)
 Treatise, Vogel, II. Explanatory Notes on the Model Convention (art.
16)
 OECD Commentary on Art. 15 and 16 OECD
 L. van Kalmthout, Taxation of income from employment under Dutch
Tax treaties, A tax globalist (2005), p. 63-72
 B. Peeters, Article 15 of the OECD Model Convention on “Income
from Employment” and its Undefined Terms, European Taxation, Vol.
44 (2004), no. 2/3, p. 72-82
 F.P.G. Pötgens, The “Closed System” of the Provisions on Income
from Employment in the OECD Model, European Taxation, Vol. 41
(2001), no. 7/8, p. 252-263

Jurisprudence (principle of subsidiarity):

 ECJ 27 June 1996, Case C-107/94 (Asscher)
 ECJ 12 May 1998, Case C-336/96 (Gilly)
 ECJ 14 September 1999, Case C-391/97 (Gschwind)
 ECJ 16 May 2000, Case C-87/99 (Zurstrassen)
 ECJ 18 March 2010, Case C-440/08 (Gielen)
 ECJ 24 February 2015, Case C-512/13 (Sopora)



Case 1. Employment Abroad

Characterize behind facts according to the OECD Model Convention and
give the usually used method for elimination of double taxation of each
kind of income.
Characterize the different types of above-mentioned income and what is
its relationship of these types?


a. Jan, an American citizen, is living in France and is an employee
in the United Kingdom. He earns € 60,000 a year. He also gets a
bonus of € 10,000 and a free holiday (market value € 4,000).

,First, is the treaty applicable? FR-UK (objective and subjective scope)

Always establish the residence state (art.4)  we have to mention US-FR

Then, we look to the relevant allocation rule (art.15 1)

Conditions:

- Revenue
- Cross-border
- Resident of a contracting state
- No special rules

§2.1: all those payments are covered (payments can be split up)

No information enough to apply art. 15 2

Credit method between FR and UK


b. Jan is living in France and is a non-executive director of ‘Snowy
Business BV’ in the Netherlands. He earns € 60,000 a year.

,First, treaty applicable (objective and subjective) NL-FR

Then, allocation rule: art.16 (where the company is situated)

Non-executive director does not do other activities  clearcut

Relief method: credit 23B




c. Jan is an artist and is living in France and he will perform in the
Netherlands for one work. He will earn € 5,000.




First, treaty applicable (objective, subjective)

Allocation: art.17 entertainer

Relief method: credit method (but really depends)




d. Jan is living in France and he is a member of the supervisory
board of ‘Mastermind BV’ in the Netherlands. He earns € 50,000 a
year.

, First, applicability of the treaty.

Then, allocation rule: art.16 (depends of the functions performed by the
individual and the wording of the relevant treaty) where the company is
located. Here, not managing the company but supervision non-
executive.

Relief method: credit 23B


e. Jan is living in France and he receives a ‘pension’ (€ 30,000 a
year) from Plastic BV (the Netherlands) because of an accident
which happened at the working place in the Netherlands, where
he was working. He will receive this pension for ten years.




First, applicability of the treaty

Then, allocation rule: art.18 lex specialis BUT (commentary 2.14: no
damages but rather a pension, back to art.15 and not 21  residence
state)