The Resource Un-taxed profit between head office and permanent establishment does not constitute a criminal tax offence - a German example

Un-taxed profit between head office and permanent establishment does not constitute a criminal tax offence - a German example

Label
Un-taxed profit between head office and permanent establishment does not constitute a criminal tax offence - a German example
Title
Un-taxed profit between head office and permanent establishment does not constitute a criminal tax offence - a German example
Creator
Subject
Language
eng
Summary
The number of tax treaties in which the treaty partners agree on the new wording of Article 7 OECD-MTC is increasing. At the same time, countries are starting to implement the Authorised Organisation for Economic Cooperation and Development (OECD) Approach into their local legislation in order to be able to use the extended treaty language. This development will invariably trigger overlapping tax bases and result in double taxation. One of the reasons will be that the treatment - acceptance or nonacceptance - of internal dealings in the local rules for determining the profits (or losses) of permanent establishments differs. If the local rules for determining the tax base of a permanent establishment differ in two countries this may lead to an overlap of these tax bases with the result of double taxation, or a gap between these tax bases with the result of non-taxation of the relevant income. The latter is commonly referred to as 'white or un-taxed income'. Whereas the double taxation which results from an overlap of the tax bases in two treaty countries may not be resolved due to the lack of access to the mutual agreement procedure if and to the extent that the reasons are indeed the differing rules of determining taxable income and, hence, would have to be accepted by a taxpayer. Conversely, there are cases, in which the tax authorities intend to treat the existence of a gap between the taxable incomes of a taxpayer in two different countries as a criminal offence even though the reason is to be found in the differing local rules of determining taxable income. This article analyses whether such disparity in the tax treatment is warranted. This phenomenon is extremely topical in the context of the very recent discussion on base erosion and profit shifting because it shows that the reduction of taxes within the existing legal framework cannot be penalized by the governments. On the contrary, governments would have to close the loopholes in their local legislation namely the practice of issuing rulings to selected taxpayers
Citation source
In: Intertax. - Alphen aan den Rijn. - Vol. 41 (2013),
http://library.link/vocab/creatorName
  • Andresen, U
  • Kiesel, H
Geographic coverage
  • European Union
  • Europe
Language note
English
http://library.link/vocab/subjectName
  • tax treaty
  • double taxation
  • PE
  • allocation of profits
  • double non-taxation
  • tax offence
  • criminal tax law
Label
Un-taxed profit between head office and permanent establishment does not constitute a criminal tax offence - a German example
Instantiates
Publication
Label
Un-taxed profit between head office and permanent establishment does not constitute a criminal tax offence - a German example
Publication

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