Tax Treaty Case Law around the Globe 2018
1. Aufl. 2019
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S. 255Chapter 22 Spain: Aircraft Leasing on a Bareboat Charter Basis – The Meaning of Industrial Equipment in the Royalty Definition
Ricardo García Antón
22.1. Introduction
On 26 June 2017, the Spanish National Court (AN) delivered a relevant judgment concerning the treatment of payments to Irish, Japanese and US companies for the lease of aircraft on a bareboat charter basis, whereby no crew or provisions are included as part of the agreement. This chapter will focus on the interpretation of the concept of royalties in relation to the lease of aircraft on a bareboat charter basis in the double tax conventions (DTCs) between Spain and Ireland, Japan and the United States. The AN’s reasoning will shed light on the interplay between article 3(2) of the OECD Model/UN Model and the definition of royalties envisaged by article 12 of the OECD Model/UN Model.
22.2. Facts of the case
The taxpayer made payments of EUR 49,683,281.17 in 2008 and EUR 46,894,096.32 in 2009 to companies resident in the Cayman Islands, Ireland, Japan and the United States for the lease of aircraft on a bareboat charter basis. No withholding tax was levied on previous payments by the taxpayer.
Because these non-resident compa...