Tax Treaty Case Law around the Globe 2023

1. Introduction

The tax court ruled on the requirements for the existence of a permanent establishment (hereinafter PE) in the case of a non-resident person carrying out construction activity and providing services in Argentina.

The presence of a PE in Argentina determines that a non-resident subject for tax purposes has a significant presence in the country and is required to pay income tax as a resident subject, that is, on both Argentinian and foreign income without regard to other consequences that may arise. The tax liability will always be proportional to the amount of income attributed to the PE based on its assets, functions, and risks. The existence of a PE establishes the exemption to the rule that non-resident subjects are only taxed on their Argentinian source income for tax purposes.

In the case at hand, tax authorities determined that the non-resident company Solvay S. A. (hereinafter SOLVAY BELGIUM), a Belgian company, had a PE in Argentina under the terms of the tax convention signed between Argentina and the Kingdom of Belgium to avoid double taxation and prevent tax evasion with respect to income and capital taxes (1996) (hereinafter DTC Argentina-Belgium).

S. 276The nation...