As a result of a taxpayer inquiry in the frame of the ministerial express reply service a mutual agreement procedure was initiated with the U.S. tax administration on the interpretation and application of the so-called „base erosion test" of Article 16 para. 1 subpara. d). In this international procedure both sides agreed that the test has been incorporated into the treaty as it was developed by the U.S. and has insofar to be interpreted according to the understanding of the U.S. Therefore the term „gross income" which was translated into the German language by using the term „Einnahmen" does not have the meaning attached to it under Austrian tax terminology but has the meaning attributed to it in the U.S. technical explanations. Furthermore it was clarified that the 50 per cent limit of the base erosion test is to be calculated on the basis of total gross income of the Austrian company and not only on the portion derived from U.S. sources. Finally it was made clear that refinancing interest does not reduce the amount of „gross income" of a financing company.