Tax Treaty Case Law around the Globe 2022

20.1. Introduction

The tax issue of the control of licence and maintenance contracts is essential in the current context of the development of new technologies. Indeed, these contracts give rise to remunerations whose legal qualification will not lead to the same result. Two cases may arise. Either the remuneration is considered as a provision of services, and taxation will then be in the state of residence of the beneficiary – except if the service is provided through a permanent establishment; or it is considered as a royalty, and taxation will in this case be done by means of a withholding tax in the state of the debtor. Depending on the wording of the tax treaties, the elimination of double taxation will be done by means of a tax credit or a tax reduction. In this context, how to qualify the remuneration of software maintenance and integration services? The Supreme Court (Conseil d’Etat) answers this question, in three appeals. Only the first of these three appeals because the other two give rise to identical arguments and solutions, even though the countries concerned are not the same and the question relates to software integration services.

20.2. Facts of the case

In France,...