Einde inhoudsopgave
Treaty Application for Companies in a Group (FM nr. 178) 2022/2.4.2.3
2.4.2.3 Associated enterprise
L.C. van Hulten, datum 06-07-2022
- Datum
06-07-2022
- Auteur
L.C. van Hulten
- JCDI
JCDI:ADS657720:1
- Vakgebied(en)
Europees belastingrecht / Richtlijnen EU
Vennootschapsbelasting / Fiscale eenheid
Internationaal belastingrecht / Belastingverdragen
Vennootschapsbelasting / Belastingplichtige
Voetnoten
Voetnoten
Art. 9, par. 1, OECD MTC.
Commentary on art. 5 OECD MTC, par. 119. It was initially envisaged that use would be made of the concept of associated enterprise for the application of the permanent establishment provision in the OECD MTC (OECD, Preventing the Artificial Avoidance of PE Status, Action 7 - Public Discussion Draft 31 October 2014 - 9 January 2015, Paris: OECD Publishing 2014, p. 20). Reactions indicated that the concept of associated enterprise has too broad a scope for the permanent establishment provision, so the OECD has opted for a different approach. First they suggested to use the term connected enterprise (OECD, Revised Discussion Draft on BEPS Action 7: Prevent the Artificial Avoidance of PE Status, Paris: OECD Publishing 2015, p. 31) and subsequently the term closely related enterprise (OECD, Preventing the Artificial Avoidance of Permanent Establishment Status, Action 7 - 2015 Final Report, Paris: OECD Publishing 2015, p. 39).
Art. 9 OECD MTC stipulates that companies must act with each other as if they were independent parties. In this context, the concept of associated enterprise is defined. This is the case if an enterprise from a Contracting State participates directly or indirectly in the management, control or capital of an enterprise in the other Contracting State.1 A relationship, within the meaning of the provision, also exists if the same person participates directly or indirectly in the management, control, or capital of an enterprise in one Contracting State and in an enterprise in the other Contracting State. The relationship or association between two companies within the meaning of art. 9 OECD MTC may thus take the form of a parent-subsidiary relationship (vertical relationship) or two sister companies (horizontal relationship). Both forms of relationships can exist on the basis of share ownership, as well as through participation in management or supervision.
Art. 9 OECD MTC uses the concepts of person and enterprise, just like art. 5, par. 8, OECD MTC. The provision therefore refers to relationships with natural persons, legal entities and unincorporated legal forms that carry out business activities.
According to the Commentary on art. 5, par. 8, OECD MTC, the concept of closely related enterprise should be distinguished from the concept of associated enterprise as included in art. 9 OECD MTC. There is some overlap between the two concepts, but – according to the OECD Commentary – they are not meant to be completely the same.2 A difference between the concept of closely related enterprise and the concept of associated enterprise is the fact that the former describes specific share relationships in which case there is automatic association. The concept of associated enterprise therefore seems to have a broader scope. The approach that the OECD has chosen with the concept of associated enterprise is therefore a substantive one. An advantage of such an open standard is that it is difficult to avoid applying the provision. A disadvantage is that there may be uncertainty as to whether a situation falls within the scope of the definition or not. This may lead to legal uncertainty.