Tax Treaty Case Law around the Globe 2014

S. 239Chapter 23 Finland: Taxing Rights on Employee Stock Options under Tax Treaties and the Relevance of the OECD Model Commentary

Marjaana Helminen

23.1. Introduction

The Supreme Administrative Court of Finland (Korkein hallinto-oikeus, KHO) gave its decision on 16 May 2013 in case KHO 2013/1704 (93). The case concerns the division of the taxing rights on income from an employment opinion on the basis of tax treaty articles corresponding to article 15 of the OECD Model. The relevance that the Commentary on the OECD Model should be given was one of the main issues. The case also concerned the determination of tax residence for Finnish tax purposes under the Finnish 3-year rule of section 11 of the Income Tax Act (TVL). This contribution, however, examines only the relevance of the OECD Model Commentary

23.2. Facts of the case and relevant tax provisions

Finnish national A was granted employment option rights for shares in a Finnish company, X Oyj (pubic company limited by shares), under two employment option programmes. The option rights were granted while A was residing in Italy and working for an Italian subsidiary of the Finnish parent company X Oyj. The first options were granted on 20 M...