Treaty Application for Companies in a Group (FM nr. 178) 2022/6.3.11:6.3.11 Interim conclusion: somewhat more realistic changes to the OECD MTC to become more suitable for companies in a group

Treaty Application for Companies in a Group (FM nr. 178) 2022/6.3.11

6.3.11 Interim conclusion: somewhat more realistic changes to the OECD MTC to become more suitable for companies in a group

Deze functie is alleen te gebruiken als je bent ingelogd.Deze functie is alleen te gebruiken als je bent ingelogd.Deze functie is alleen te gebruiken als je bent ingelogd.

Reaching international consensus on abolishing the separate entity approach for domestic purposes and for application of the treaty rules in the OECD MTC seems impossible from a political perspective. Therefore, this chapter describes a somewhat more realistic variant as a second option to make the OECD MTC more suitable for groups of companies. The proposed solutions are ad hoc solutions that will make the current model more complicated. However, they are desirable from the perspective of the aim and purpose of the OECD MTC. The following main solutions have been presented:

–

lowering the shareholding threshold in the dividend article;

–

requiring economic nexus for application of the residence definition;

–

eliminating withholding taxes on intra-group dividends;

–

aligning the withholding tax rate on interest and royalties;

–

abolishing economic double taxation with respect to profit distributions in group situations;

–

the introduction of a reorganization clause;

–

a rule to make sure there is alignment with respect to the value of assets for purposes of exit taxation; and

–

requiring a switch-over clause if the exemption method is applied.

Introducing these suggestions fully or partially in the OECD MTC in a timely manner can best be done via a second multilateral instrument. This would not provide a solution for the separate entity approach in the OECD MTC. Additionally, it should be acknowledged that some of the identified problems (i.e., the taxation of digital activities, base erosion possibilities via interest deduction and triangular cases) are not solved.

Deze functie is alleen te gebruiken als je bent ingelogd.