Tax Treaty Case Law around the Globe 2015
1. Aufl. 2016
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S. 109Bolivia: Total E&P Bolivie Sucursal Bolivia, a PE of two French Companies at the Same Time
Alvaro Villegas
I. S. 110Introduction
The Total E&P case was decided by the Bolivian Supreme Court on 30 December 2013 and published in June 2014. At a first glance, this decision seems to be one more of the large number of cases about a PE of branch type. Nevertheless, this judgment deals with some particular issues and results in a confusing outcome for the taxpayer.
The tax controversy deals with a branch of a foreign company that also became a deemed PE of a third company of the same group. As a result, the source country (Bolivia) taxed the third company’s income on a gross basis. An additional curious fact of this case is that such income constituted a payment in return for technical services rendered by the PE in favour of itself. All of these controversial issues are dealt with Articles 5 and 7 of the Bolivia-France Tax Treaty, in force since , and with Article 4 of the protocol thereof.
The protocol, introduces a clause to enhance the limited force of attraction rule, regarding Article 7 of the treaty, by stating that income derived from activities involving technical services wh...