6.2.3.6 Capital gains (art. 13 OECD MTC)

A unitary business approach would mean that transactions and reorganizations within the corporate group are not visible for tax purposes. This would mean no treaty provisions are necessary for reorganizations within the unitary group. To avoid any doubt, a provision to confirm this could be introduced in art. 13 OECD MTC. Additionally, it should be determined how capital gains on transactions between unitary business entities and non-unitary business entities would be reflected for tax purposes. Similar to business profits realized, these capital gains should be allocated to the various jurisdictions where there is a sufficient economic nexus.

As art. 13 OECD MTC is not solely applicable in an intra-group context, most of the provisions in the article would remain relevant for non-unitary business situations. This is even the case for art. 13, par. 4, OECD MTC, as the article would not only apply in situations involving a unitary business. However, the reference to permanent establishments in art. 13, par. 2, OECD MTC should be deleted under the envisaged approach.