Tax Treaty Case Law around the Globe 2012
1. Aufl. 2013
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Canada: Transfer of Losses
Jacques Sasseville
31.1. Introduction
The decision of the Tax Court of Canada in Saipem UK Limited v. The Queen was rendered on 14 January 2011. Less than 8 months later, that decision was affirmed by unanimous decision of the Federal Court of Appeal.
The decision deals with the application of article 24 (Non-discrimination) of the OECD Model Tax Convention (OECD Model) to the transfer of business losses attributable to a Canadian permanent establishment of a UK company.
31.2. Facts of the case
The case deals with business losses (“non-capital losses” under the Canadian Income Tax Act) that Saipem UK Limited (Saipem UK), a company resident of the United Kingdom, attempted to claim in its 2004, 2005 and 2006 taxation years. These losses were realized by another UK member of the Saipem corporate group, Saipem Energy International Limited (Saipem Energy), before it was liquidated.
The losses were realized through a Canadian permanent establishment of Saipem Energy during its 2001, 2002 and 2003 taxation years. At that time, Saipem Energy, a company resident of the United Kingdom, was a subsidiary of Saipem International B.V., a company resident of the Netherlands w...