This book provides a comprehensive analysis of the rules governing the taxation of permanent establishments as implemented in the OECD Model Tax Convention and German national tax law. Deviations between the OECD approach and the German approach are identified and modifications to the rules as a result of the Base Erosion and Profit Shifting (BEPS) project are examined. Moreover, challenges imposed to the PE concept as a result of the digitalisation of the economy are identified and discussed. Against this background, the Pillar One Blueprint proposing a long-term solution to overcome the tax challenges arising from the digitalisation of the economy is presented and assessed against widely accepted overarching principles of tax policy.

Attribution of Profits to Permanent Establishments: Issues and Developments The profit attribution to permanent establishments is one of the most controversial topics in international tax law. In recent years it was subject to various changes based on the introduction of the “Authorized OECD Approach” in 2008 and 2010, the outcomes of Final Report on OECD BEPS Action 7 and the Final Report on “Additional Guidance on the Attribution of Profits to a Permanent Establishment under BEPS Action 7” from 2018 (with the previous Discussion-Drafts). This publication discusses the most important issues and recent developments related to the attribution of profits to permanent establishments. Starting with an in-depth analysis on the commonalities and differences between the profit attribution provisions in modern double tax treaties (ie Art 7 AOA vs Art 9 OECD/UN Models), it further deals with topics such as profit attribution to PEs and PE exemptions (Art 5 para 4), profit attribution to agency PEs (Art 5 para 5 and 6), and profit attribution to a "significant economic presence" and to market states. This book is based on the outcomes of the presentations and discussions held during the WU Transfer Pricing Symposium that took place in October 2019 at the WU Vienna University of Economics and Business. The authors, apart from providing a theoretical background to the discussed issues, also present case studies that show how certain issues can be approached in practice. Every chapter ends with a summary of the opinions on the issues at stake of representatives of tax administrations, multinationals and tax advisories, which completes this essential practical guideline.

The permanent establishment (PE) is a legal form of cross-border direct investment whereby a business presence is maintained as an integral part of the foreign investor. Due to the growing intensity and complexity of international business relations, the PE defi¬nition and the allocation of profi¬ts between head units and PEs have become highly contentious, especially from the perspectives of the major emerging economies of the BRIC countries (Brazil, Russia, India, and China). Unsurprisingly, the potential for tax avoidance and the scrutiny of tax authorities have increased enormously. Against this background, this work illustrates and compares the OECD Model Tax Convention with country-specifi¬c source taxation rules, focusing on possible tax system changes and offering reform proposals. Emphasizing the taxable implications of the various rules upon country-speci¬fic PE concepts, the author’s treatment covers such issues and topics as the following: – the PE de¬finition of the OECD MC and from the perspective of selected countries; – allocation of business pro¬fits under the Authorised OECD Approach (AOA); – avoidance of PE status; – implementation of a service PE proposal; – construction site PEs established by subcontractors; – existence of an agency PE; and – the OECD project on Base Erosion and Profi¬t Shifting (BEPS). The author uses simulated cross-border national and treaty cases to highlight qualifi¬cation conflicts, thus reinforcing his detailed discussion of source taxation rules of business profi¬ts and relevant case law in Germany, the United States, and the BRIC states. There is also a checklist detailing how companies can avoid unintentionally setting up a PE. The author’s deeply informed proposals provide much-needed guiding tax criteria and open the way to greater feasibility and transparency in PE taxation. Because the defi¬nition of PEs has enlarged and the treatment of profi¬t allocation has become more complex, the clari¬fication of the PE concept presented in this book is of inestimable importance for lawyers, of¬ficials, policymakers, and academics concerned with international business taxation in any jurisdiction.

Transfer pricing is one of the most relevant and challenging topics in international taxation. Over the last century, nearly every country in the world introduced transfer pricing rules into their domestic legislation. Indeed, it was estimated that profit shifting generated by the improper application of transfer pricing rules has resulted in global tax losses worth USD 500 billion for governments – 20% of all corporate tax revenues. It is thus imperative that all tax professionals thoroughly understand the nature of transfer pricing and how the growing body of applicable rules works in practice. In this crucially significant volume, stakeholders from government, multinational companies, international organisations, advisory groups and academia offer deeply informed perspectives, both general and specific, on the practical application of transfer pricing rules, taking into consideration all the most recent developments. With approximately 160 practical examples and 90 relevant international judicial precedents, the presentation proceeds from general to more specialised topics. Such aspects of the subject as the following are thoroughly analysed: what is transfer pricing and the purpose of transfer pricing rules; the arm’s length principle and its application; the consequences of a transaction not being in accordance with the arm’s length principle; the transfer pricing methods; the mechanisms to avoid and resolve disputes; the transfer pricing documentation; the attribution of profits to permanent establishments; the transfer pricing aspects of specific transactions, such as services, financing, intangibles and business restructurings. The application of transfer pricing legislation is arguably the most difficult task that taxpayers and tax authorities around the world must face. With this authoritative source of practical guidance, government officials, tax lawyers, in-house tax counsel, academics, advisory firms, the business community and other stakeholders worldwide will have all the detail they need to move forward in tackling this thorny aspect of the current tax environment.

"Switzerland has recently witnessed an unprecedented level of tax treaty negotiations. Although this is a direct result of Switzerland's revised position regarding exchange of information, a number of contracting states have taken this opportunity to modify tax treaty benefits and/or clarify certain aspects of tax treaty interpretation and application. These are considered extensively in this edition. As Switzerland has steadily aligned itself with international principles of international taxation, the self-imposed anti-abuse rules for the application of tax treaties have become less relevant. Nevertheless, Swiss courts have become more creative in determining where there is and where there is not treaty abuse. As a result, the 1962 Abuse Decree is making way for a more complex basket of anti-abuse rules and regulations"--Foreword (page vii).

Schwarz on Tax Treaties is the definitive analysis of tax treaties from United Kingdom and Irish perspectives and provides in-depth expert analysis of the interpretation and interaction of those treaty networks with the European Union and international law. The sixth edition significantly develops the earlier work with enhanced commentary and is updated to include the latest UK, Irish domestic and treaty developments, international and EU law, including: Covered Tax Agreements modified by the BEPS Multilateral Instrument; judicial decisions of Ireland, the UK and foreign courts on UK and Irish treaties; Digital Services Tax; treaty binding compulsory arbitration; Brexit and the EU-UK Trade and Cooperation Agreement; taxpayer rights in exchange of information; taxpayer rights in EU cross-border collection of taxes; attribution of profits to permanent establishments; and EU DAC 6 Disclosure of cross-border planning. Case law developments including: UK Supreme Court in Fowler v HMRC; Indian Supreme Court in Engineering Analysis Centre of Excellence Private Limited and Others v CIT; Australian Full Federal Court in Addy v CoT; French Supreme Administrative Court in Valueclick; English Court of Appeal in Irish Bank Resolution Corporation v HMRC; JJ Management and others v HMRC; United States Tax Court in Adams Challenge v CIR; UK Tax Tribunals in Royal Bank of Canada v HMRC; Lloyd-Webber v HMRC; Esso Exploration and Production v HMRC; Glencore v HMRC; McCabe v HMRC; Padfield v HMRC; Davies v HMRC; Uddin v HMRC; English High Court in Minera Las Bambas v Glencore; Kotton v First Tier Tribunal; and CJEU in N Luxembourg I, and others (the ‘Danish beneficial ownership cases’); État belge v Pantochim; College Pension Plan of British Columbia v Finanzamt München; HB v Istituto Nazionale della Previdenza Sociale. About the Author Jonathan Schwarz BA, LLB (Witwatersrand), LLM (UC Berkeley), FTII is an English Barrister at Temple Tax Chambers in London and is also a South African Advocate and a Canadian and Irish Barrister. His practice focuses on international tax disputes as counsel and as an expert and advises on solving cross-border tax problems. He is a Visiting Professor at the Faculty of Law, King’s College London University. He has been listed as a leading tax Barrister in both the Legal 500, for international corporate tax, and Chambers’ Guide to the Legal Profession, for international transactions and particular expertise in transfer pricing. He has been lauded in Who’s Who Legal, UK Bar for his ‘brilliant’ handling of cross-border tax problems. In Chambers Guide, he is identified as ‘the double tax guru’ with ‘extraordinary depth of knowledge and experience when it comes to tax treaty issues and is a creative thinker and a clear and meticulous writer’.

Attribution of Profits to Permanent Establishments: Issues and Developments The profit attribution to permanent establishments is one of the most controversial topics in international tax law. In recent years it was subject to various changes based on the introduction of the “Authorized OECD Approach” in 2008 and 2010, the outcomes of Final Report on OECD BEPS Action 7 and the Final Report on “Additional Guidance on the Attribution of Profits to a Permanent Establishment under BEPS Action 7” from 2018 (with the previous Discussion-Drafts). This publication discusses the most important issues and recent developments related to the attribution of profits to permanent establishments. Starting with an in-depth analysis on the commonalities and differences between the profit attribution provisions in modern double tax treaties (ie Art 7 AOA vs Art 9 OECD/UN Models), it further deals with topics such as profit attribution to PEs and PE exemptions (Art 5 para 4), profit attribution to agency PEs (Art 5 para 5 and 6), and profit attribution to a "significant economic presence" and to market states. This book is based on the outcomes of the presentations and discussions held during the WU Transfer Pricing Symposium that took place in October 2019 at the WU Vienna University of Economics and Business. The authors, apart from providing a theoretical background to the discussed issues, also present case studies that show how certain issues can be approached in practice. Every chapter ends with a summary of the opinions on the issues at stake of representatives of tax administrations, multinationals and tax advisories, which completes this essential practical guideline.