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'Liable to Tax' and Company Residence under Tax Treaties

RESIDENCE OF COMPANIES UNDER TAX TREATIES AND EC LAW, EC AND INTERNATIONAL TAX LAW SERIES, Vol. 5, pp. 197-271, G. Maisto, ed., IBFD: The Netherlands, 2009

Sydney Law School Research Paper No. 10/131

77 Pages Posted: 24 Nov 2010  

Richard J. Vann

The University of Sydney Law School

Date Written: November 23, 2010

Abstract

This paper considers the application to companies of the “liable to tax” residence test in the first sentence of article 4(1) of the OECD Model along with its elaboration in the second sentence with a focus on the policy and history of the test to see what assistance they provide for modern day interpretation.

Accordingly the first section asks what is the purpose of the company residence test in tax treaties (as opposed to the residence test generally) which requires a broad but brief overview of the operation of the company tax and how companies are dealt with in treaties. The second – and main – section then turns to history to see to what extent policy may have been a guide in the development of the company residence test in treaties and what those who developed the test may have intended by the liable to tax test in relation to companies. The third section uses such guidance as may be obtained from the policy and history to analyse some current company residence issues. The fourth section provides some necessarily tentative conclusions.

Keywords: Business income, Corporate taxation, Double taxation, History, International taxation, League of Nations, OECD, Permanent establishment, Residence, Transfer pricing, Tax treaties, Treaty shopping

JEL Classification: K10, K30, K33, K34

Suggested Citation

Vann, Richard J., 'Liable to Tax' and Company Residence under Tax Treaties (November 23, 2010). RESIDENCE OF COMPANIES UNDER TAX TREATIES AND EC LAW, EC AND INTERNATIONAL TAX LAW SERIES, Vol. 5, pp. 197-271, G. Maisto, ed., IBFD: The Netherlands, 2009; Sydney Law School Research Paper No. 10/131. Available at SSRN: https://ssrn.com/abstract=1714131

Richard J. Vann (Contact Author)

The University of Sydney Law School ( email )

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The University of Sydney
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Australia
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HOME PAGE: http://www.law.usyd.edu.au/about/staff/RichardVann/index.shtml

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