September 20, 2017

O.E.C.D. Issues Proposed Changes to Permanent Establishment Provisions Under Model Tax Convention

September 20, 2017/ Ruchelman P.L.L.C.

Earlier this year, the O.E.C.D. proposed amendments to Article 5 (Permanent Establishment) of the Model Tax Convention and Commentary. The revisions eliminate loopholes that exist for commissionaire arrangements, artificial characterization of core activities as “preparatory,” avoidance of permanent establishment status through artificial fragmentation of contracts, and the use of not-so-independent agents. Neha Rastogi, Beate Erwin, and Stanley C. Ruchelman explain the replacement provisions.

March 31, 2016

2016 Model Treaty – B.E.P.S. and Expatriated Entities

March 31, 2016/ Ruchelman P.L.L.C.

On February 17, 2016, the Treasury Department released its 2016 Model Treaty. The model serves as the baseline from which the U.S. initiates treaty negotiations. Various provisions are discussed in detail in this month’s Insights.

The 2016 Model Treaty adopts certain B.E.P.S. provisions, including those that eliminate double non-taxation through a splintered operation which divides a long-term project among several related parties and each party maintains the project for a limited time. That type of planning no longer works. Other B.E.P.S.-related revisions are missing. Sheryl Shah and Elizabeth V. Zanet explain what is out and what is in. They also address the way payments from expatriated entities are treated. It is not all bad news.