At sixes and sevens : the relationship between the taxation of business profits and income from immovable property under tax treaties

Journal
Author
Arnold, B.J.
Published Date
Issue
Bulletin for International Taxation 2006 (Volume 60), No. 1
FormatPDF
EUR
45
| USD
50 (VAT excl.)

This article discusses the relationship between Art. 6 (Income from immovable property) and Art. 7 (Business profits) of the OECD Model Tax Convention. The issue examined is whether it is appropriate for Art. 6 to apply in preference to Art. 7 in all circumstances. After an overview of Arts. 6 and 7, the article considers the potential overlap between them, which involves the situation where immovable property constitutes a permanent establishment under Art. 5 and where income from immovable property constitutes business profits. The article also examines the relationship between Art. 6 and the other distributive articles of the OECD Model to see if those relationships provide any insight into the proper relationship between Arts. 6 and 7. The implications of the OECD Discussion Draft on the Attribution of Profits to Permanent Establishments for the relationship between Arts. 6 and 7 is explored briefly. The article concludes that it is inappropriate for Art. 6 always to trump Art. 7 and considers some possible changes to modify that result.