Tax Treaty Case Law around the Globe 2014
1. Aufl. 2015
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S. 253Chapter 24 Israel: Relationship between the Employment Article and the Sportsmen Article
Tsilly Dagan and Yariv Brauner
24.1. Introduction
This case reignites the debate over the relationship between articles 17 and 15 of the OECD Model under Israeli law.
24.2. Facts of the case
Maccabi Rishon, an Israeli (first league) professional basketball team, employed several basketball players who were US citizens and residents during the relevant years: 1998-2001.
Israeli domestic law required Maccabi Rishon to withhold taxes from the wages of these players; however, it did not withhold based on article 18 of the 1975 Israel-United States Income Tax Treaty that provided for a threshold for source taxation (by Israel in this case). The wages of the relevant players did not pass this threshold of USD 400 per day.
The Israel Tax Authority assessed a deficiency based on the failure to withhold and Maccabi Rishon appealed to the District Court of Tel Aviv.
24.3. The court proceedings
The District Court of Tel Aviv was asked to decide about the legal relationship between articles 18 (Public Entertainers) and 17 (Dependent Personal Services) of the treaty and specifically whether Maccabi Rishon should hav...