Article
Dec 24
Back

RESOLUTION OF DUAL RESIDENCE INSTANCES IN THE CASE OF COMPANIES

Lidija Živković

10.51204/Anali_PFUB_20406A
ABSTRACT /

The application of double taxation treaties presupposes that the potential cases of dual residence have been previously resolved. For this purpose, the major model-conventions on the basis of which double taxation treaties around the globe are negotiated contain the so-called tie-breaker rule. In the wake of the recent revision of the international tax system resulting from the OECD’s Base Erosion and Profit Shifting Action Plan, the existing tie-breaker rule for companies has been thoroughly amended. Instead of determining companies’ residence based on the place of the effective management criterion, the new approach stipulates that such cases will be decided through the application of the Mutual Agreement Procedure, between the competent authorities of the relevant contracting states. After outlining the historical development of the said mechanism in the context of dual residence resolution, this article purports to critically assess its desirability, with a special focus on its implementation in Serbia.

DOWNLOAD COMPLETE ARTICLE /
English  
REFERENCES /
  • Berglund, Martin, Katia Cejie. 2018. Basics of International Taxation: From a Methodological Point of View. Uppsala: Iustus Förlag.
  • Bräumann, Peter, Michael Tumpel. 2016. Dual Resident Companies, Intercompany Dividends, Real Estate Companies. 303–325 in Base Erosion and Profit Shifting (BEPS): The Proposals to Revise the OECD Model Convention, edited by Michael Lang, Pasquale Pistone, Alexander Rust, Josef Schuch, and Claus Staringer. Vienna: Linde Verlag.
  • Burgers, Irene. 6–7/2007. Some Thoughts on Further Refinement of the Concept of Place of Effective Management for Tax Treaty Purposes. Intertax 35: 378–386.
  • Burgstaller, Eva, Katharina Haslinger. 8–9/2004. Place of Effective Management as a Tie-Breaker Rule – Concept, Developments and Prospects. Intertax 32: 376–387.
  • Couzin, Robert. 2002. Corporate Residence and International Taxation. Amsterdam: IBFD.
  • Holmes, Kevin. 2014. International Tax Policy and Double Tax Treaties: An Introduction to Principles and Application. Amsterdam: IBFD.
  • Jones, John А. 5–6/2009. 2008 OECD Model: Place of Effective Management – What One Can Learn from the History, Bulletin for International Taxation 63: 183–186.
  • Kahn, A. Douglas. 1990. The Two Faces of Tax Neutrality: Do They Interact or Are They Mutually Exclusive? Northern Kentucky Law Review 18: 1–19.
  • Knechtle, Arnold. 1979. Basic Problems in International Fiscal Law. Deventer: Kluwer.
  • Lang, Michael. 2013. Introduction to the Law of Double Taxation Conventions, Vienna: Linde.
  • Langer, Andreas. 2018. The Legal Relevance of the Minimum Standard in the OECD/BEPS Project. 89–110 in The OECD Multilateral Instrument for Tax Treaties: Analysis and Effects, edited by Michael Lang, Pasquale Pistone, Alexander Rust, Josef Schuch, and Claus Staringer. Alphen aan den Rijn: Wolters Kluwer.
  • League of Nations. 1946. Protocol of the Model Bilateral Convention for the Prevention of the Double Taxation of Income and Property – London Draft. http://adc.library.usyd.edu.au/view?docId=split/law/xml-main-texts/brulegi-source-bibl-15.xml;chunk.id=item-15;toc.depth=1;toc.id=item-15;database=;collection=;brand=default (last visited 10 July 2020).
  • Maisto, Guglielmo, Stephane Austry, John A. Jones, Philip Baker, Peter Blessing, Robert Danon, Shefali Goradia, Johann Hattingh, Kiochi Inoue, Jürgen Lüdicke, Toshio Miyatake, Angelo Nikolakakis, Frank Pötgens, Kees van Raad, Richard Vann, Bertil Wiman. 2018. Dual Residence of Companies under Tax Treaties. 1–84 in International Tax Studies, edited by Pasquale Pistone. Amsterdam: IBFD.
  • Nenadić, Sara. 2016. Tie-Breaker for Dual Resident Companies. 127–145 in Preventing Treaty Abuse, edited by Daniel W. Blum and Markus Seiler. Vienna: Linde Verlag.
  • Obuoforibo, Belema. 2018. Residence. 1–15 in Roy Rohatgi on International Taxation: Volume 1 – Principles, edited by Ola Ostaszewska and Belema Obuoforibo. Amsterdam: IBFD Online Books.
  • OECD TAG. 2001. The Impact of the Communications Revolution on the Application of “Place of Effective Management” as a Tie-Breaker Rule, Discussion Paper from the Technical Advisory Group on Monitoring the Application of Existing Treaty Norms for the Taxation of Business Profits. Paris: OECD Publishing.
  • OECD TAG. 2003. Place of Effective Management Concept: Suggestions for Changes to the OECD Model Tax Convention. Paris: OECD Publishing. http://www.oecd.org/tax/treaties/2956428.pdf (last visited 14 July 2020).
  • OECD. 2008. The 2008 Update to the OECD Model Tax Convention, Paris: OECD Publishing. https://www.oecd.org/ctp/41032078.pdf (last visited 14 July 2020).
  • OECD Centre for Tax Policy and Administration. 2008. Draft Contents of the 2008 Update to the Model Tax Convention. Paris: OECD Publishing. http://www.oecd.org/ctp/treaties/40489100.pdf (last visited 24 July 2020).
  • OECD/G20. 2015a. Explanatory Statement: Base Erosion and Profit Shifting Project, Final Reports. Paris: OECD Publishing. https://www.oecd.org/ctp/beps-explanatory-statement-2015.pdf (last visited 24 July 2020).
  • OECD/G20. 2015b. Preventing the Granting of Treaty Benefits in Inappropriate Circumstances, Action 6 – Final Report. Paris: OECD Publishing.
  • OECD/G20. 2015c. Making Dispute Resolution Mechanisms More Effective, Action 14 – Final Report. Paris: OECD Publishing.
  • OECD. 2015d. Comments Received on Revised Public Discussion Draft, Follow-up Work on BEPS Action 6. Paris: OECD Publishing. https://www.oecd.org/ctp/treaties/public-comments-revised-beps-action-6-follow-up-prevent-treaty-abuse.pdf (last visited 20 July 2020).
  • OECD. 2017. Model Tax Convention on Income and on Capital: Condensed Version. Paris: OECD Publishing.
  • OECD. 2020. Making Dispute Resolution More Effective – MAP Peer Review Report, Serbia (Stage 1): Inclusive Framework on BEPS: Action 14, OECD/G20 Base Erosion and Profit Shifting Project, Paris: OECD Publishing. https://www.oecd-ilibrary.org/docserver/c65f36fb-en.pdf?expires=1596285406&id=id&accname=guest&checksum=74ABB0322ADBD1FEE26D03C4B4D8A05E (last visited 20 July 2020).
  • OEEC Fiscal Committee. 1957a. Report on the Taxation of Income and Capital of Shipping and Air Transport Enterprises and of their Crews, Working Party 5, 6 May 1957. https://taxtreatieshistory.org/ (last visited 15 July 2020).
  • OEEC Fiscal Committee. 1957b. Report on the Concept of Fiscal Domicile, Working Party 2, 23 May 1957. https://taxtreatieshistory.org/data/html/FC-WP2(57)1E.html (last visited 15 July 2020).
  • OEEC Fiscal Committee. 1957c. Fourth Report on the Concept of Fiscal Domicile, Working Party 2, 5 November 1957 https://taxtreatieshistory.org/data/html/FC-WP2(57)3E.html (last visited 15 July 2020).
  • OEEC Fiscal Committee. 1958. Final Report on the Concept of Fiscal Domicile, Working Party 2, 9 January 1958. https://taxtreatieshistory.org/data/html/FC-WP2(58)1E.html (last visited 15 July 2020).
  • Popović, Dejan. 2017. Poresko pravo. Belgrade: University of Belgrade Faculty of Law.
  • Popović, Dejan, Svetislav V. Kostić. 2009. Ugovori o izbegavanju dvostrukog oporezivanja Republike Srbije – Pravni okvir i tumačenje. Belgrade: Cekos in.
  • Popović, Dejan, Gordana Ilić-Popov, Lidija Živković. 2020. Serbia. 699–719 in Tax Treaty Arbitration, edited by Michael Lang, Jeffrey Owens, Pasquale Pistone, Alexander Rust, Josef Schuch, Claus Staringer, and Alfred Storck. Amsterdam: IBFD.
  • Popović, Dejan, Gordana Ilić-Popov, Lidija Živković. 2020a. Serbia. 691–709 in Reconstructing the Treaty Network, edited by David Duff and Daniel Gutmann. IFA Cahiers Vol. 105A. Amsterdam: IBFD.
  • Sasseville, Jacques. 2006. A Tax Treaty Perspective: Special Issues. 37–61 in Tax Treaties and Domestic Law, edited by Guglielmo Maisto. Amsterdam: IBFD.
  • Sasseville, Jacques. 2009. The Meaning of “Place of Effective Management”. 287–302 in Residence of Companies under Tax Treaties and EC Law edited by Guglielmo Maisto. Amsterdam: IBFD.
  • Sanghavi, Dhruv. 9/2016. The Proposed Tie-breaker Rule in OECD/G20 BEPS Action 6: A Critical Examination of the Possible Motives and Means, and a Potential Alternative. Bulletin for International Taxation 70: 520–525.
    https://doi.org/10.2139/ssrn.2834175
  • U.S. Treasury Department. 2016. United States Model Income Tax Convention. Washington D.C. https://www.treasury.gov/resource-center/tax-policy/treaties/Documents/Treaty-US%20Model-2016.pdf (last visited 26 July 2020).
  • Živković, Lidija. 2017. Rezidentstvo pravnih lica, Master’s thesis, University of Belgrade Faculty of Law.