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Attribution of Participations to Permanent Establishments (II)
Tax Consequences – Crucial Aspects in Practice
This article is the second of a two-part contribution that takes a detailed look at the attribution of participations to permanent establishments (PEs). It particularly addresses the tax consequences of attribution or non-attribution of participations to PEs, respectively, and gives an outlook on crucial aspects in practice.
1. Tax Consequences of the Attribution or Non-Attribution of Participations to Permanent Establishments
This section will analyse the tax consequences of the attribution or non-attribution of participations to PEs from a tax treaty perspective. The focus will lie on an analysis of Art 7 OECD Model 2010 (which is indeed the same version as under the OECD Model 2014 and the OECD Model 2017). Based on this analysis the following questions will be answered:
What are the tax consequences of cross-border attributions of participations to PEs?
Is Art 7 AOA a self-executing provision?
Is there a need for national transfer pricing and/or exit taxation legislation, so that the tax consequences of a cross-border attribution of participations to PEs may materialize?
1.1. Tax Consequences based on Art 7 OECD Model 2010?
The question concerning potential tax consequences of Art 7 O...