OCLC Number: (OCoLC)276852155 Subject: Double taxation -- United States -- Treaties. Excerpt: ...usiness profits would be subject to tax by that ...
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OCLC Number: (OCoLC)276852155 Subject: Double taxation -- United States -- Treaties. Excerpt: ...usiness profits would be subject to tax by that country. This special rule presents a number of administrative and compliance challenges. For example, a number of the terms used in this rule, such as what constitutes presence' or a connected project, ' are ambiguous and require further clarification. In addition, when combined with Article 14 of the Convention, further complexities arise. Article 14(1) of the Convention, with certain exceptions, sets forth a general rule that if an employee who is a resident of one treaty country (the residence country') is working in the other treaty country (the employment country'), his or her salaries, wages, and other remuneration derived from the exercise of employment in that country may be taxed by that country (the employment country). Notwithstanding this general rule, Article 14(2) of the treaty provides that the remuneration derived by the employee from the exercise of employment in the employment country shall be taxed only by the residence country (and not the employment country) if: 1) the employee is present in the employment country for 183 days or less in any 12-month period commencing or ending in the taxable year concerned; 2) the remuneration is paid by, or on behalf of, an employer who is not a resident of the employment country; and 3) the remuneration is not borne' by a permanent establishment that the employer has in the employment country. It is the final requirement, which states that the remuneration must not be borne' by a permanent establishment that the employer has in the employment country, that interacts with the special rule in Article 5(8) in a potentially significant and negative way. In other words, the salaries, wages, and other remuneration derived by an employee performing services through a permanent establishment arising under Article 5(8) of...
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