BULLETIN FOR INTERNATIONAL FISCAL DOCUMENTATION 2000

BULLETIN 

FOR 

INTERNATIONAL 

FISCAL 

DOCUMENTATION 

2000

BULLETIN FOR INTERNATIONAL FISCAL 


2000 Vol. 54 Num. 8 

ISSN : 0007-4624 

Título: MUNICH, A "CAPITAL OF GERMAN TAX LAW" 

Autor: Vogel, K. pg - 385-386 

Título: SUBJECTS AND SEMINARS OF THE 2000 CONGRESS 

Autor: pg - 387-388 

Título: DRAFT LEGISLATION ON THE FUTURE TAXATION OF BUSINESS 

ENTERPRISES IN GERMANY 

Autor: Mattausch, H. E. pg - 389-396 

Título: THE TAXATION OF GERMAN PARTNERSHIPS 

Autor: Lethaus, H. J.; Mohr, A. H. pg - 397-404 

Título: VALUE ADDED TAXATION IN GERMANY 

Autor: Reiss, W. pg - 405-413 

Título: INTERNATIONAL ASPECTS OF THE INHERITANCE TAX IN GERMANY 

Autor: Piltz, D. J. pg - 414-416 

Título: THE ARM'S LENGTH PRINCIPLE IN GERMAN TAX LAW 

Autor: Wassermeyer, F. pg - 417-424 

Título: TRANSFER PRICING IN GERMANY 

Autor: Baumhoff, H. pg - 425-433 

Título: GERMAN ANTI-AVOIDANCE RULES AND TAX PLANNING OF NON- 

RESIDENT TAXPAYERS 

Autor: Fuger, R.; Rieger, N. pg - 434-441 

Título: GERMAN TAX TREATMENT OF HYBRID FINANCIAL INSTRUMENTS IN 

CROSS-BORDER TRANSACTIONS 

Autor: Jacob, F. pg - 442-454 

Título: ADVANCE RULINGS IN GERMANY 

Autor: Eilers, S.; Schiessl, M. pg - 455-460 

Título: THE INFLUENCE OF EU LAW ON TAX TREATIES FROM A GERMAN 

PERSPECTIVE 

Autor: Lehner, M. M. pg - 461-470 

Título: GERMANY'S TAX TREATY POLICY

Autor: Krabbe, H. pg - 471-475 

Título: PERMANENT ESTABLISHMENT IN GERMANY'S TAX TREATIES 

Autor: Runge, B. pg - 476-478 

Título: THE TAXATION OF INVESTMENT FUNDS IN GERMANY 

Autor: Dehnen, P. H.; Groning, M.; Rhines, R. pg - 479-485 

Título: ECOLOGICAL TAX REFORM IN GERMANY 

Autor: Rodi, M. pg - 486-494




Título: TAX TREATY NEWS 

Autor: Vogel, K. pg - 502 

ISSN : 0007-4624 

Título: INTERPRETATION OF ARTICLE 15(2)(b) OF THE OECD MODEL 

CONVENTION: "REMUNERATION PAID BY, OR ON BEHALF OF AN 

EMPLOYER WHO IS NOT A RESIDENT OF THE OTHER STATE" 

Autor: De Broe, L.; Jones, J. A.; Ellis, M.; van Raad, K.; Le Gall, J.-P.; Torrione, H.; 

Vann, R.; Miyatake, T.; Roberts, S.; Goldberg, S. pg - 503-521 

Título: ARTICLE 26 OF THE OECD MODEL IN LIGHT OF THE RIGHT TO 

INFORMATIONAL SELF-DETERMINATION 

Autor: Schaumburg, H.; Schlossmacher, S. pg - 522-528 

Título: ENTREPRENEUR PACKAGE BILL IN THE NETHERLANDS: IMPORTANT 

CHANGES TO THE CORPORATE INCOME TAX 

Autor: Pijl, H.; Groeniger, F. O. pg - 531-536 

Título: CONSTITUTIONAL AND STATUTORY REQUIREMENTS FOR LEVYING 

TAX IN ESTONIA 

Autor: Lehis, L. pg - 537-544




ISSN : 0007-4624 

Título: GENERAL ANTI-AVOIDANCE RULES IN THE TAX LEGISLATION OF 

HUNGARY 

Autor: Foldes, G. pg - 558-564 

Título: TRANSFER PRICING IN CHINA 

Autor: Li, J. pg - 565-576 

Título: THE NEW VALUE ADDED TAX LAW IN LIECHTENSTEIN 

Autor: Seeger, N.; Jenny, C. pg - 577-582 

Título: REVIEW OF TWO RECENT OECD PUBLICATIONS ON TAX STATISTICS 

Autor: Messere, K. pg - 583-594




ISSN : 0007-4624 


Autor: Vogel, K. 

pg - 610-611 

Título: THE INFLUENCE OF THE OECD COMMENTARIES ON TREATY 

INTERPRETATION 


pg - 612-616 

Título: THE INFLUENCE OF THE OECD COMMENTARIES ON TREATY 

INTERPRETATION - RESPONSE TO PROF. DR KLAUS VOGEL 

Autor: Ellis, M. J. 

pg - 617-618 

Título: DO WE STILL NEED TAX TREATIES? 

Autor: Easson, A. 

pg - 619-625 

Título: TAX ASSIGNMENT AND SUBNATIONAL FISCAL AUTONOMY 

Autor: McLure, C. E. 

pg - 626-635 

Título: TAX POLICY REFORMS IN GHANA 

Autor: Appiah-Kubi, K. 

pg - 636-643 

Título: DENMARK'S FAVOURABLE TAX REGIME FOR INWARD 

EXPATRIATES 

Autor: Ottosen, A. M. 

pg - 644-648 

Título: TAX ASPECTS OF TRUSTS IN ARGENTINA AND THEIR USE AS 

VEHICLES FOR RAISING CAPITAL 

Autor: Meloni, E. O. 

pg - 649-654






2001



2001 Vol. 55 Num. 1 

Título: INTERNATIONAL TAX ISSUES IN A RAPIDLY CHANGING WORLD 

Autor: Lodin, S.-O. 

pg - 1-7 

Título: DIVIDEND FLOWS: TREATY RULES OR THE PARENT-SUBSIDIARY 

DIRECTIVE? THE ITALY-UK EXPERIENCE 

Autor: Gazzo, M.; Fleming, N. 

pg - 8-16 

Título: FINLAND'S IMPUTATION SYSTEM UNDER THE PRESSURE OF 

GLOBALIZATION 

Autor: Helminen, M. 

pg - 17-21 

Título: FIRST COMPREHENSIVE "REMEDIAL" REVIEW OF NEW ZEALAND'S 

GOODS AND SERVICES TAX 

Autor: Maples, A. J. 

pg - 22-32



2001 Vol. 55 Num. 2 

Título: CURRENT ISSUES UNDER EUROPEAN COMMUNITY LAW ON CROSS- 

BORDER DIVIDENDS 

Autor: Schwarz, J. S. 

pg - 46-51 

Título: TREATY RELIEF IN SWITZERLAND ON OUTBOUND INVESTMENT 

Autor: Hull, H. R.; Teuscher, H. 

pg - 52-61 

Título: THE FOREIGN-INCOME EXEMPTION IN SPAIN AND THE CANARY 

ISLANDS SPECIAL ZONE 

Autor: Palao, C. 

pg - 62-67 

Título: SUBSTANCE VERSUS FORM IN TAX PLANNING: RECENT CASES 

INVOLVING THE RAMSAY DOCTRINE 

Autor: VanderWolk, J. 

pg - 68-73 

Título: REVIEW OF PART II OF RUSSIA'S NEW TAX CODE 

Autor: Astakhov, E.; Zhestkov, S. 

pg - 74-80



2001 Vol. 55 Num. 3 



pg - 91-92 

Título: INTERPRETING TAX TREATIES - A CANADIAN PERSPECTIVE 

Autor: Hausman, J. S. 

pg - 93-99 

Título: TRANSFORMATION OF JAPAN'S CORPORATION TAX: 1988 TO 2000 

Autor: Masui, Y. 

pg - 100-106 

Título: CROSS-BORDER VALUATION FOR INCOME TAX, CUSTOMS DUTIES 

AND VAT 

Autor: Maisto, G. 

pg - 107-113 

Título: THE WINE-BOX INQUIRY IN NEW ZEALAND: ROUND TWO - A 

"GUTTED" REPORT BUT NO "KNOCKOUT PUNCH" 

Autor: Sawyer, A. J. 

pg - 114-125



2001 Vol. 55 Num. 4 

Título: PARTNERSHIP TAXATION IN SWEDEN 

Autor: Wiman, B. 

pg - 130-137 

Título: SOUTH AFRICA CHANGES TO A WORLDWIDE TAX SYSTEM 

Autor: Mazansky, E. 

pg - 138-146 

Título: THE TAX TREATMENT OF STOCK OPTIONS IN AUSTRIA 

Autor: Gahleitner, G.; Moritz, H. 

pg - 147-151 

Título: DID THE ECJ'S DECISION IN SAINT-GOBAIN CHANGE 

INTERNATIONAL TAX LAW? 

Autor: van den Hurk, H. 

pg - 152-157 

Título: DEVELOPING A TAX COMPLIANCE STRATEGY FOR REVENUE 

SERVICES 

Autor: James, S.; Hasseldine, J.; Hite, P.; Toumi, M. 

pg - 158-164



2001 Vol. 55 Num. 5 

Título: THE NEW TRANSFER PRICING REGULATIONS IN JAPAN 

Autor: Okada, Y. 

pg - 170-184 

Título: THE U.S. TREASURY'S SUBPART F REPORT: PLUS CA CHANGE, PLUS 

C'EST LA MEME CHOSE? 

Autor: Avi-Yonah, S. 

pg - 185-188 

Título: THE FRENCH FINANCE BILL FOR 2001: SPREADING VARIOUS TAX 

CUTS 

Autor: Marrer, V. 

pg - 189-192 

Título: RECENT CHANGES IN CORPORATE TAXATION IN HUNGARY 

Autor: Toth, K.; Kurucz-Varadi, K. 

pg - 193-199 

Título: SINGAPORE'S BUDGET FOR 2001: TAX REDUCTIONS AND 

MEASURES TO ENCOURAGE INNOVATION 

Autor: Hong, L. F. 

pg - 200-202 

Título: DIVIDEND FLOWS: TREATY RULES OR THE PARENT-SUBSIDIARY 

DIRECTIVE? THE ITALY-FRANCE EXPERIENCE 

Autor: Gazzo, M.; Girard, J.-M.; Demenge, P. 

pg - 203-211



2001 Vol. 55 Num. 6 

Título: THE "ONE TRUE MEANING" OF A TAX TREATY 

Autor: Jones, J. F. A. pg - 220-224 

Título: ARGENTINA'S TAX TREATY NETWORK AND THE 

DISTINCTIVE FEATURES OF ITS TREATIES 

Autor: Atchabahian, A. pg - 225-232 

Título: WEAK-CURRENCY BORROWINGS AND THE GENERAL 

ANTI-AVOIDANCE RULE IN CANADA: FROM SHELL CANADA TO 

CANADIAN PACIFIC 

Autor: Duff, D. G. pg - 233-240 

Título: TRIANGULAR CASES, TAX TREATIES AND EC LAW: THE 

SAINT-GOBAIN DECISION OF THE ECJ 

Autor: Jimenez, A. J. M.; Prats, F. A. G.; Carrero, J. M. C. pg - 241-253 

Título: THE ECJ'S DECISION IN AMID AND ITS IMPLICATIONS 

FOR BELGIAN COMPANIES 

Autor: Dassesse, M. pg - 254-259



2001 Vol. 55 Num. 8 


Autor: Vogel, K. pg - 319-320 

Título: PROTOCOL TO THE UNITED STATES-GERMANY ESTATE 

TAX TREATY 

Autor: Shannon, H. A. pg - 321-327 

Título: GLOBALIZATION, TAX RULES AND NATIONAL 

SOVEREIGNTY 

Autor: McLure, C. E. pg - 328-341 

Título: SOUTH AFRICA INTRODUCES CAPITAL GAINS TAXATION 

Autor: Mazansky, E. pg - 342-353 

Título: BELGIUM'S HOLDING COMPANY REGIME - THE 

DIVIDENDS-RECEIVED DEDUCTION AND CAPITAL GAINS 

EXEMPTION FOR SHARES 

Autor: Hinnekens, P.; Drijkoningen, P. pg - 354-360 

Título: AMENDMENTS TO DENMARK'S HOLDING COMPANY, CFC 

AND CAPTIVE INSURANCE COMPANY REGIMES 

Autor: Ottosen, A. M.; Hansen, L. C. pg - 361-364 

Título: TAX INCENTIVES FOR FOREIGN DIRECT INVESTMENT - 

PART II: DESIGN CONSIDERATIONS 

Autor: Easson, A. pg - 365-375

2001 Vol. 55 Num. 9 

Título: OVERVIEW OF THE U.S. TAX CONSEQUENCES OF 

DISREGARDED ENTITIES 

Autor: Rachofsky, D. J. pp. 388-396 

Título: THE U.S. FOREIGN TAX CREDIT FOR CORPORATE 

TAXPAYERS 

Autor: Vacovec, K. J.; James, T. S.; Hoiberg, L. L. pp. 397-406 

Título: ADVANCE RULINGS IN THE UNITED STATES 

Autor: Triplett, C. S.; Maloney, J. C. pp. 407-416 

Título: TRANSFER PRICING IN THE UNITED STATES: RECENT 

EVENTS AND EXPECTATIONS FOR THE FUTURE 

Autor: Wright, D. R. pp. 417-426 

Título: SALE OF SHARES TO RELATED COMPANIES: THE 

SURPRISING TAX CONSEQUENCES OF U.S. INTERNAL REVENUE 

CODE § 304 

Autor: Brewer, K. pp. 427-439 

Título: FOREIGN ACQUISITION OF A U.S. TARGET GROUP AND 

SUBSEQUENT RESTRUCTURING 

Autor: Patton, B. L.; Monette, J. pp. 440-453 

Título: U.S. INCOME TAXATION OF FOREIGN INVESTMENT IN 

U.S. REAL ESTATE 

Autor: Streng, W. P. pp. 454-467 

Título: TAX AND STRUCTURAL ASPECTS OF PRIVATE EQUITY 

INVESTING IN THE UNITED STATES: A PRACTICAL GUIDE FOR 

NON-U.S. INVESTORS AND FUND MANAGERS 

Autor: Newberg, J. H. pp. 468-483 

Título: INTERNATIONAL JOINT VENTURES: SELECTED 

PRACTICAL CONSIDERATIONS 

Autor: West, P. R. pp. 484-492 

Título: MAKING SENSE OF U.S. INTERNATIONAL TAXATION: SIX 

STEPS TOWARD SIMPLIFICATION 

Autor: Avi-Yonah, R. S. pp. 493-497

Título: U.S. TAXATION OF FOREIGN CORPORATIONS IN THE 

DIGITAL AGE 

Autor: McIntyre, M. J. pp. 498-506 

Título: U.S. TAXATION OF E-COMMERCE UNDER SUBPART F - 

MISSING PIECES LEAVE UNCERTAINTY 

Autor: Glicklich, P. A.; Leitner, A. pp. 507-512 

Título: THE U.S. TAX INCENTIVE FOR EXPORTS - TO BE OR NOT 

TO BE 

Autor: Hammer, R. M.; Green, W. H. pp. 513-522 

Título: THE QUIET REVOLUTION IN U.S. SUBNATIONAL 

CORPORATE INCOME TAXATION 

Autor: Stark, K. J. pp. 523-531 

Título: CURRENT ISSUES UNDER THE CANADA-UNITED STATES 

INCOME TAX TREATY - A TEN-YEAR PERSPECTIVE 

Autor: Boidman, N. pp. 532-544

2001 Vol. 55 Num. 11 

Título: KEY ISSUES AND OPTIONS IN INTERNATIONAL 

TAXATION: TAXATION IN AN INTERDEPENDENT 

WORLD 

Autor: Guttentag, J. H. pp. 546-556 

Título: FIRST IMPRESSIONS FROM THE UNITED 

KINGDOM OF THE NEW UNITED KINGDOM-UNITED 

STATES TAX TREATY 

Autor: Jones, J. F. A. pp. 557-561 

Título: TAX TREATMENT OF STOCK OPTIONS IN 

DENMARK 

Autor: Pedersen, B. M. pp. 562-570 

Título: TAX CONCESSIONS AVAILABLE TO SMALL 

BUSINESS IN AUSTRALIA 

Autor: Hanegbi, R. pp. 571-579 

Título: TAX ASPECTS OF STRUCTURING AND 

DISPONSING OF INVESTMENTS IN MEXICO 

Autor: Fonseca, M.; Carcamo, L. pp. 580-586






2002

, . 

APRIL 2002 BULLETIN 

, CONTENTS 

ARTICLES 

VOL. 56 NO. 4 APRIL 2 

EU ANO US SALES TAXES IN THE OIGITAL AGE: A COMPARATIVE ANALYSIS 

Charles E. McLure, Jr. 

This article compares the VATs in the Europear Unjan and the state sales taxes in the United States. 

The article first describes several key characteristics of an ideal sales tax and notes the inherent difficulty 

of satisfactorily implementing sales taxes levied by local governments. The article next explains 

the basic operation of the two types of sales taxes, and then describes the structural defects in the 

existing US retail sales taxes and the EU VATs, the economic effects of the defects, the inherent difficulty 

of taxing digital content, and the proposals for reform made in the European Unjan and the 

United States. In an attempt to explain the differences described earlier, the last part compares the 

historical development of sales taxes in the United States and the European Unjan. 

MAJOR ISSUES ANO CHALLENGES IN FISCAL RESTRUCTURING IN ASIA 

Or Chia Ngee Choon , 

As Asia becomes more; integratedinto the world economy, the trade-offs between the benefits of integration 

and the costs of surrendering fiscal autonomy become important considerations for tax policy 

and tax administration. Fiscal restructuring refers to the need to re-examine the revenue-raising 

capacity of a country and its spending needs and to make 'the necessary changes. This article examines 

the majar issues and challen~s facing policymakers in Asia as they restructure their fiscal systems 

in response to ~xternal changes and their domestic fiscal needs. 

AUSTRIAN COURT RULES ON THE:TF;:iEATMENT OF CROSS-BOROER LOSSES UNOER TAX TREATIES WITH 

EXEMPTION~ErHOO ¡ 

Geral~Gahleitner and Clemens Nowotny , 

In a recent decision, AuStria's-'¡'ighest court for tax litigation dealt with the treatment of losses of a foreign 

permanent establishment\under a tax treaty which provides for the exemption method for avoiding 

double taxation. In its decision, which deviates considerably from the court's former rulings and 

indicates a new reasoning independent of EC )aw, the court concluded that a loss sustained by a foreign 

permanent establishment may be offset against the taxable profits of the head office in Austria. 

This article examines the court's d~~.iplJ. and analyses its impacto 

OUAL RESIOENCE CONFLlCTS ANO THE ELlMINA~IPN OF INTERNATIONAL OOUBLE TAXATION IN FINLANO 

Prof. Or Marjaana Helminen . 

A dual residence conflict may arise. 'there a Finnish national who resided in Finland moves abroad, 

but does not break all pis substantial Tles with Finland. According to the three-year rule in Finland, the 

Finnish national will be treated, for Finnish tax purposes, as a Finnish resident and subject to unlimited 

tax liability in Finland in the year of emigration and the three subsequent years. The new state of 

, residence will also treat the taxpayer, for its tax purposes, as a resident of that state from the time of 

immigration. This article examines the extent to which Finland eliminates international double taxation 

in these cases in both non-treaty and treaty situations. 

TAXATION OF NON-RESIOENT COMPANIES UNOER KAZAKHSTAN'S NEW TAX COOE ANO TAX TREATIES 

Sholpan Isakova 

The new Tax Code of Kazakhstan carne into force on 1 January 2002 and replaced the Law on Taxes, 

numerous tax instructions and letters of the Ministry of State Revenues which had regulated the interpretation 

and application of Kazakhstan's international tax provisions, including tax treaties. This article 

reviews the rules in the Tax Code on the taxation of non-resident companies in Kazakhstan, ana-; 

Iyses the general approach to interpreting tax treaties, and examines the principal changes made to 

interpreting and applying Kazakhstan's tax treaties. 

MINING IN ZIMBABWE: INCOME TÁX ANO WITHHOLOING TAX CHANGES "r 

D.G. Murphy 

This article discusses the significant income tax and withholding tax changes which were made with 

respect to mining operations in Zimbabwe by the Finance Act, 2001 and the Finance Act, 2000. The 

changes apply to "mining operations", as defined in the Income Tax Act of Zimbabwe, and include, 

, 

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VOL. 56 NO. 5 MAY 20( 

PLORING CARIBBEAN TAX STRUCTURE ANO HARMONIZATION STRATEGIES 1 

Amos C, Peters 

This article explores the tax structure and harmonization strategies of the Caribbean Community 

(CARICOM). After the introductory remarks, the article summarizes the major elements of the CARI- 

COM Single Market and Economy, examines the concept of harmonization, and dlscusses the tax 

harmonization eftorts in CARICOM and the European Unión, including the lessons that can be learned 

from the European Union. The article al so considers the arguments for and against tax harmonizatlon 

in the context of CARICOM, describes the tax structures in CARICOM, and presents a policy framework 

and suggested strategies for harmonization. 

~Y TAX CORPORATIONS? 1 

Richard M. Bird 

This article examines the question of why corporations should be taxed -in particular, why taxing 

corporations may be desirable, may be necessary, and may be convenient. The artlcle also discusses 

how to tax corporations and, in the conclusion, the article identifies some important factors in determining 

what can and should be done with respect to reforming corporate taxes. 

ITICAL APPRAISAL OF TAX EXPENOITURES ANO THE IMPLEMENTATION OF ENVIRONMENTAL POLICY IN 

STRALIA 21 

Hope Ashiabor 

Concerns about the threat posed to life and property by environmental degradation are increasingly 

taking centre stage in both domestic and international forums. The challenges PQsed by this threat 

have elicited varying policy responses from the regulatory authorities. This article IQoks at one aspect 

of that policy response, namely, the use of fiscal instruments by governments to ~hape the direction 

of their environmental policy. This article uses Australia's experience with tax expenditures and the 

implementation of environmental policy as a case study to provide a contempor¡jlry context for the 

analysis. The articles draws lessons from other OECO countries in suggesting rsfinements to Australia's 

tax expenditure rules. 

ROPEAN COMMISSION STRATEGY FOR COMPANY TAXATION IN THE EUROPEAN COMMtJNITY 2 

Jonathan S. Schwarz 

The European Commission recently presented formally its strategy for company ta~ation in the Europea 

n Union. The strategy was presented in a substantial and well-researched document which develops 

the general priorities established by the Commission in May 2001. This article discusses and 

comments on the Commission's strategy. 

VISEO CONOITIONS FOR TREATY REUEF IN SWITZERLANO 2 

Howard R. Hull and Hannes Teuscher 

This article updates an earlier article in the Bulletin and takes into consideration the favourable developments 

in Oecember 2001, when the Swiss Federal Tax Administration significantly revised and si mplified 

the Swiss domestic anti-abuse rules which apply when a Swiss resldent company claims relief 

from foreign withholdihg taxes on the basis of a tax treaty. The annex to the article serves as a summary 

guideline to the practical implementation of the new rules. 

IMULATIVE INDEX 2~ 

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\X TREA TY MONITOR 

CONTENTS 

VOL. 56 NO. 6 JUNE 2002 

~X TAEATY NEWS 226 

Prof. Dr Dr h.c. Klaus Vogel 

JSTAALlA'S CAPITAL GAINS TAX ANO DOUBLE TAXATION AGAEEMENTS 228 

Prof. Aobert Deutsch and Nolan Sharkey 

On 19 December 2001, the Australian Taxation Office (ATO) issued a ruling entitled "Income tax and 

capital gains tax: capital gains in pre-CGT tax treaties". In the ruling, the ATO concluded that Australia's 

taxation of capital gains under the Income Tax Assessment Act 1936 Is not affected in any way 

by Australia's pre-CGT treaties (concluded before 20 September 1985, when capital gains became 

taxable in Australia). This article examines the ruling and points out the problems with the ATO's rea- 

soning. 

JMMAAY OF THE PAOCEEDINGS OF AN INVITATIONAL SEMINAA ON TAX TAEATIES IN THE 21ST CENTUAY 233 

Brian J. Arnold, Jacques Sasseville and Eric M. Zolt 

On 23-25 October 2001, an invitational seminar on the future of tax treaties wa$ held at the new 

offices of the IBFD in Amsterdam. The purpose of the seminar was to encourage t;'road-ranging discussions 

of the nature, raje and operation of tax treaties with a view to enhancing ~he understanding 

of tax treaties and identifying ways in which they might be improved. This article summarizes the discussions 

during the seminar. 

=tTICLE 

The appendix to the article contains background notes on the major topics discussed: 

-Jacques Sasseville, "The Aole of Tax Treaties in the 21 st Century" 246 

-Kees van Aaad, "Options for Greater International Coordination and Cooperation in thé Tax Treaty 

Area" 248 

-Michael J. Mclntyre, "Options for Greater International Coordination and Cooperation in the Tax Treaty 

A re a" 250 

-Aobert A. Green, "The Interaction of Tax and Non- Tax Treaties" 254 

-Eric Zolt, "Alternatives to the Existing Allocation of Tax Aevenues among Countries" 257 

-Klaus Vogel, "The Schedular Structure of Tax Treaties" 260 

-David Aosenbloom, "Comments on the Schedular Structure of Tax Treaties" 262 

-Hugh J. Ault, "Issues Aelated to the Identification and Characteristics of the Taxpayer" 263 

-Brian J. Arnold, "Taxing Business Profits" 264 

-Aobert Couzin, "Aelief.of Double Taxation" 266 

-John F. Avery Jones, "The Aelationship betwéen Domestic Tax Systems and Tax Treaties" 268 

-Jacques Sasseville, "Improving the Flexibility ot Tax Treaties: Part 1 -Generallssues" 271 

-Guglielmo Maisto, "Improving the Flexibility of Tax Treaties: Part 2 -Cross-Border Tax Issues arlsing 

from Corporate Aeorganizations" 272 

)ES THE AEACH OF THE EUAOPEAN COUAT OF JUSTICE EXTEND BEYOND THE EUAOPEAN UNjaN? 275 

Hans van den Hurk 

The recent decision of the European Court of Justice (ECJ) in the Jany case, which originated from 

the Netherlands, concerned the claim made by East European prostitutes -based on the association 

agreements concluded by the European Union with Poland and the Czech Aepubllc -that they should 

be able to work and settle in Amsterdam as prostitutes. This article considers, taking into account EC 

jurisprudence, the tax aspects of the European Economic Area Treaty in international tax law and discusses 

the purpose of association agreements. This article algo examines the tax aspects of association 

agreements, based on a case currently pending in the ECJ, which raises the question whether 

it is compatible with Commumty law for a Member Sta te (the Netherlands) to deny a tax deduction for 

interest paid in the Netherlands in connection with a foreign participation while, in the domestic con- , 

text, the interest is deductible. 

lJMULATIVE INDEX 282 

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AUGUST/SEPTEMBER 2002 ". BULLETIN, 345 

CONTENTS \ 

: : VOL. 56 NO. 8/9 AUGUST/SEPTEMBER 2002 

lB F D 

ARTICLES 

INTROOUCTION TO THE 56TH IFA CONGRESS 348 

Jerome B. Libin 

SUBJECTS ANO SEMINARS OF THE 2002 CONGRESS 350 

OIRECT TAXES IN NORWAY -A BIRO'S-EYE VIEW 352 

Prof. Frederik Zimmer 

This article gives an overview of the direct taxes in Norway -the income tax, net wealth tax, payroll 

tax, inheritance tax and real estate laxo With regard to the income tax, which is the most important single 

tax, the article provides a brief historical background and summarizes the salient features of personal 

income taxation, including family taxation, the taxation of companies and partnershlps, and 

international taxation. 

THE TAXATION OF INCOME FROM CAPITAL VERSUS THE TAXATION OF EARNEO INCOME IN NORWAY 359 

Hakon L0chen 

One of the basic ideas of the 1992 tax reform in Norway was that, beca use capital is mobile, income 

from capital should not be taxed more heavily in Norway than in countries with which Norway compeles 

for capital. Another idea of the reform was that earned income should be taxed at progressive 

rates in arder to promote so me equalization of after-tax income. Complex problems surfaced when 

addressing the problem of how to tax enterprises run by the owners and other self-f3mployed taxpayers. 

This article sets out Norway's system for taxing capital income and the system for taxing earned 

income. The article also describes the allocation model and, in the concluding part, addresses the initiative 

taken this year to reform the reformed system. 

COMPUTING CAPITAL GAINS ON SHARES: A TEN-YEAR OLO -ANO SUCCESSFUL(?) -EXPERIMENT 364 

Prof. Ole Gjems-Onstad 

For ten years, Norway has conducted a unique experiment in taxing capital gains on shares. In 

English, the technique may be called the "Norwegian opening value adjustment method" or the "RISK 

method" (with a Norwegian acronym), which applies a kind of full imputation technique to the capital 

gains taxation of shares. The jury is still out concerning the RISK method but, at present, it appears 

most likely that the method will be continued. The final conclusion, the technological challenges, and 

the administrative costs of the system may warrant considerable interest from the international tax 

community and tax legislators in favour of the full imputation system for dividends. This article examines 

the RISK method. 

THE NOROIC MUL TILATERAL TAX TREATIES -FOR THE AVOIOANCE OF OOUBLE TAXATION ANO ON 

MUTUAL ASSISTANCE 371 

Odd Hengsle 

This article considers two Nordic multilateral tax treaties -the income and capital tax treaty for the 

avoidance of double taxation and the treaty on mutual assistance in tax matters. The article gives the 

historical background to the treaties and outlines their structure. With regard to the double taxation 

treaty, the article discusses the advantages and disadvantages of a multilateral tresty and describes 

the provisions of the treaty, including those of special interest. The article siso considers Norway's 

experience with the mutual assistance treaty. 

THE INHERITANCE TAX IN NORWAY 377 

Ivar Hobbelhagen 

This article summarizes the inheritance tax in Norway. The article discusses the tax model in Norway, 

the scope of the liability for the inheritance tax, the date the heir/recipient acquires a right of disposition 

ayer the asset, the method of valuation, allowances, international situations, and the expected 

changes in the law. 

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This article describes the VAT system in Norway, originally introduced in 1970, and compares it with 

the EU V A T system, The article discusses, among other things, the sources and structure of Norway's 

VAT legislation, the tax mechanism, territorialscope, definitions, exemptions, taxable persons, tax- 

, able transactions, and exemption with credit (place of supply and zero-rating), 

'ERMANENT ESTABlISHMENTS AND ALLOCATION QUESTIONS PERTAININGTO THEM -JUDGEMENTS OF 

'HE NORWA y SUPREME COURT 392 

Eirik Jensen 

The Norway Supreme Court has, in a number of cases, been asked to clarify some issues relating to 

permanent establishments and the allocation questions pertaining to them, This article reviews the 

judgements of the Supreme Court that have addressed these issues, The judgements illustrate the 

basic attitudes underlying the Supreme Court's approach to these issues, which is notably characterized 

by a strong "substance over form" doctrine and a willingness to disregard the wording of tax 

treaties in favour of an interpretation based on other considerations..RANSFER 

PRICING IN NORWAY -THE CONCEPT OF ARM'S LENGTH CONDITIONS 401 

Einar Harboe 

This article looks at transfer pricing in Norway and the concept of arm's length conditions. The article 

discusses, a¡¡nong other things, the statutory ba~is for transfer pricing in Norway and the application 

of the OECD Transfer Pricing Guidelines which, although not formal.ly introduced into Norwegian law, 

are assumed to be in line with Norway's internallaw. 

'AX ASPECTS OF NATIONAL AND INTERNATIONAL MERGERS IN NORWAY 407 

Marianne Iversen 

This article considers the tax aspects of national and international mergers in Norway. The article first 

describes leQal mergers under Norwegian company law and the tax aspects of such mergers. The article 

then loo~s at the different types of international mergers and discusses the Norwegian company 

law and tax ~spects relating to them. The article also mentions some of the major accounting aspects 

of national aQd international mergers.NCOME 

TAX REGIMES IN NORWAY APPLICABLE TO SPECIAL BUSINESS SECTORS 415 

Stig Sollund 

This article gjves a brief overview of the special tax regimes in Norway applicable to three business 

sectors -th~ production and pipeline transport of petrOleum, the production of hydroelectric power, 

and shipping companies. The main focus is on how the special rules contrast with the general rules of 

business tax~tion in Norway. 

"AX lITIGATION IN NORWAY 421 

Per Sandvik 

The method for resolving tax disputes in Norway involves an appeal system within the tax administration 

combined with a right to have the decision reviewed in the courts. This article gives an overview 

of the administrative system in Norway and outlines the procedure fol.lowed by the courts, The article 

also describes some of the distinctive features of the tax litigation system in Norway and the courts' 

way of decidlng tax issues. In the last part, the article points out the main features of Norway's new 

system for binding advance rulings in connection with tax issues. e;1,rHE 

CONCEPT OF RESIDENCE FOR TAX PURPOSES IN NORWAY 427 ! 

Sverre Hveding and Finn Backer-Gr0ndahl 

This article examines the concept of residence for tax purposes in Norway and the interpretation of 

"resident" under Norwegian domestic law. The first part of the article outlines the requirements for 

establishing tax residence in Norway and for terminating tax liability based on residence (emigration). 

The first part al so considers the rules on the cessation of worldwide tax liability in Norway due to a 

temporary stay abroad. The second part of the article gives an overview of the proposed amendments 

relating to the concept of residence and the recently adopted amendments relating to temporary stays 

abroad. 

rAX ISSUES REGARDING THE RELATIONSHIP BETWEEN JOINT-STOCK COMPANIES IN NORWAY ANDrHEIR 

SHAREHOLDERS 437 

Sven Rune Greni 

This article surveys of some of the main tax principies in Norway which are important when examining 

the relationship between joint-stock companies and their shareholders. The article illustrates how 

these principies are interpreted in selected areas, with special emphasis on different kinds of transactions 

between joint-stock companies and their shareholders. Most, but not all, of the issues discussed 

relate in particular to one-person-owned companies, family-owned companies or group transactions. 

@ 2002 International Bureau of Fiscal Documentation .'. ..0'.' c. 

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t" TAXATION OF SALARY VERSUS CAPITAL GAIN IN NORWAY OF PERSONS IN DUAL RELATIONSHIPS 448 

t Kristian Kvamme 

There may, at times, be a dual relationship between two or more taxpayers, such as an employer and 

an employee, If the employer is a corporation, the employee may both render services to the corporation 

and have an ownership interest in it. In these situations, the questlon may arise whether a 

payment by the corporation to the employee should be taxed as a salary or as a capital gain. How this 

question is answered is important for both the employee and the employer, This article looks at transactions 

involving dual relationships and how they are treated for tax purposes in Norway. 

DEDUCTIBILlTY OF INTEREST PAID ON PROFIT-PARTICIPATING LOANS IN STOCK COMPANIES 456 

Ass. Prof, Hugo p, Matre 

Corporate financing may take a number of forms within the bounds of company and contract law in 

Norway. The basic forms of finance are equlty and debt, but the company laws also permit hybrid 

investment forms with elements of both debt and equlty, one such form being profit-participating 

loans. This article examines the nature of profit-participating loans in Norway, the nature of the interest 

paid on such loans, and whether the interest is deductible for the payer for tax purposes. 

TREATMENT OF INBOUND AND OUTBOUND EXPATRIATES IN NORWAY 463 

Johannes Brennhovd 

This article considers various aspects of the treatment of inbound and outbound expatriates in Norway. 

The article discusses, among other things, the rules pertaining to residence and work permits, 

when a person becomes a tax resident in Norway, the income tax aspects, including the impact of tax 

treaties, vacation allowances, Norway's National Insurance Scheme, and tax planning for inbound 

t and outbound expatriates. 

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IMPLlCATIONS OF HUMAN RIGHTS FOR TAX SURCHARGES AND PENAL TIES IN NORWAY 474 

Morten Wishman 

In Norway, as in many other countries, surcharges are used as deterrents to tax fraud and evasion. 

Until recently, surcharges were not regarded in Norway as a criminal retribution in a legal sense and 

were used both as an alternative to criminal prosecution and in addition to it. The application of surcharges, 

however, may be contrary to human rights, depending on the legal systen1l in question. This 

articie discusses the areas where there has been and perhaps still is a conflict betwfJen Norwegian tax 

law and human rights as embodied in the European Convention on Human Rights iand the UN International 

Covenant on Civil and Political Rights. 

TAX AVOIDANCE RULES IN SCANDINAVIAN AND ANGLO-AMERICAN LAW 485 

Bettina Banoun 

This article examines the tax avoidance rules in Scandinavian and Anglo-American Law and, in this 

context, considers the rules in various countries, including Norway, Sweden and Denmark as well as 

the United Kingdom, Ganada, Australia and the United States. The article discuss~s the "substance 

over form" doctrine and provides an in-depth discussion of the content of an ami-avoidance ruie. 

CUMULATIVE INDEX 493 

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OCTOBER 2002 '-tr-~,;1 'i"SULtETIN -~i- ~--: 497 

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TAX TREATY MONITOR 

TAX TREATY NEWS 498 

Prof. Dr Dr h.c. Klaus Vogel 

RENT -A-ST AR -THE PURPOSE OF ARTICLE 17(2) OF THE OECD MODEL 500 

Dick Molenaar and Dr Harald Grams 

This ar1icle examines the "Iimited" and "unlimited" approaches of Ar1. 17(2) of the OECD Model. Ar1. 

17 allocates the right to tax the income of ar1istes and spor1smen to the source country (although not 

exclusively). Ar1. 17(2), added in 1977, provides for the limited approach: the source country still has 

the right to tax the income when another person (not the ar1iste or spor1sman himself) receives the 

remuneration for the performance. The unlimited approach was recommended in the 1987 OECD 

Repor1 on ar1istes and spor1smen and was adopted in the 1992 Commentary to the OECD Model. 

Under the unlimited approach, Ar1. 17(2) is extended so that it applies to alllegal entities that could 

receive fees for ar1istic and spor1s performances, meaning that the profits of the separate legal entity, 

as well as the income of the ar1iste or spor1sman, are taxable under Ar1. 17(2). The main question 

addressed in this ar1icle is: What is fair and necessary regarding Ar1. 17(2) -the limited approach or 

the unlimited approach? 

THE STATUS OF DOUBLE TAXATION TREATIES IN MEXICO 510 

Pedro Arias 

Mexico, currently the only Latin American country that is a member of the OECD, has limited experience 

in concluding tax treaties -Mexico's first comprehensive tax treaties date back to only the early 

1990s. Never1heless, Mexico has published a Model Tax Convention, which is patterned after the 

OECD Model but emphasizes taxation by the source country. This ar1icle considers various aspects 

of the tax treaties concluded by Mexico, including whether tax treaties prevail ayer domestic law in 

Mexico. 

INTERACTION OF ARTICLES 6, 7 AND 21 OF THE 2000 OECD MODEL CONVENTION 516 

Raul-Angelo Papotti and Nicola Saccardo 

This ar1icle considers the treaty regime applicable under an OECD Model-type treaty to income from 

immovable property derived by a resident of a contracting state in the context of an enterprise. The 

discussion assumes that the resident carries on his entrepreneurial activity through a permanent 

establishment in the other contracting state and that the immovable property forms par1 of that permanent 

establishment. The ar1icle examines the treaty ramifications of the treatment of the income in 

three situations -when the immovable property is located (a) in the state in whi

. 

~ JUL y 2002 BULLETIN 285 

, 

CONTENTS 

VOL. 56 NO.7 JULV 2002 

T AX TREA TY MONITOR 

TAX TREATY NEWS 286 Prof. Dr Dr h.c. Klaus Vogel 

CHARACTERIZATION OF OTHER STATES' PARTNERSHIPS FOR INCOME TAX 288 John F. Avery Jones (United Kingdom), Luc De Broe 

(Belgium), Maarten J. Ellis and Kees van Raad (Netherlands), Jean-Pierre Le Gall (France), Henri Torrione (Switzerland), Toshio Miyatake (Japan), 

Sidney l. Roberts and Sanford H. Goldberg (United States), Jürgen Killius (Germany), Guglielmo Maisto and Federico Giuliani (Italy), Richard J. Vann 

(Australia), David A. Ward (Canada) and Bertil Wiman (Sweden) 

The OECD Partnership Report is a significant contribution to the discussion of how to treat partnerships for tax treaty purposes when two states 

categorize a partnership-like entity differently, either as transparent or as opaque. This article examines why different treatment of other states' 

bodies (to use a neutral term) for tax purposes can arise, particularly from the way in which sta te s classify foreign bodies, thus giving rise to part of 

the problem addressed in the OECD Partnership Report. This article focuses more on the categorization of partnerships than on the differences in tax 

treatment, which is the main focus of the OECD Report. 

CANADIAN TAXATION OF FOREIGN SERVICE PROVIDERS: TREATY ISSUES ANO COURT DECISIONS 321 Nathan Boidman 

This article discusses some important elements of the taxation of cross-border service providers in light of two recent decisions of Canadian courts, 

Cheek and Wolf. The article considers these two judgements separately and in conjunction with Dudney, decided a few years earlier. The article also 

reviews the decision in Dudney. 

ARTICLES 

TAX TREATMENT OF CROSS-BORDER INCOME DERIVED THROUGH A PARTNERSHIP -A FINNISH 

PERSPECTIVE 327 Dr Marjaana Helminen 

Cross-border investment or business may be carried out through an entity having the legal form of a partnership. The use of partnerships for crossborder 

operations involves complex international tax law issues. The tax treatment in the source state, the partnership state and the residence state 

of the partners may be unclear and inconsistent. This article examines from a Finnish perspective the tax treatment of cross-border income derived 

through a partnership. 

PROPOSALS TO REDUCE COMPLIANCE COSTS -A MIXED RESPONSE BY THE NEW ZEALAND GOVERNMENT 333 Adrian J. Sawyer 

The Ministerial Panel on Business Compliance Costs, established in October 2000 to advise the New Zealand government on ways to reduce the 

costs to business of complying with existing legislation, released a report in July 2001 in which the Panel, among other things, made 11 

recommendations for the government to consider for reducing tax compliance costs. In December 2001, the government released the discussion 

document Striking the Balance: Government Response to the Ministerial Panel on Business Compliance Costs. This article focuses on the taxation 

issues raised during the consultation, the recommendations made in the Panel's report, and the government's response to the reconimendations. 

BOOK REVIEW 341 CUMULATIVE INDEX 342 

@ 2002 Internation~1 ~ure~\i of Fi~g~1 OQg\Jm~ntgtiQn ,.

2002, v. 56, n. 11 

• Página 542-553 

Autor/es: Jimenez, AJM 

Título: DOMESTIC ANTI-ABUSE RULES AND DOUBLE TAXATION 

TREATIES: A SPANISH PERSPECTIVE - PART I 

• Página 554-562 

Autor/es: Pijl, H 

Título: THE CONCEPT OF PERMANENT ESTABLISHMENT AND 

THE PROPOSED CHANGES TO THE OECD COMMENTARY WITH 

SPECIAL REFERENCE TO DUTCH CASE LAW 

• Página 563-568 

Autor/es: Hong, LF 

Título: TAX CHANGES IN CHINA IMPENDING UPON ENTRY INTO 

THE WORLD TRADE ORGANIZATION 

• Página 569-578 

Autor/es: Berkhout, TM 

Título: DEPRECIATION AND DOWNWARD VALUE ADJUSTMENTS 

OF REAL PROPERTY ACCORDING TO SOUND BUSINESS 

PRACTICE IN THE NETHERLANDS

2002, v. 56, n. 12 

• Página 586-599 

Autor/es: McLure, CE 

Título: REPLACING SEPARATE ENTITY ACCOUNTING AND THE 

ARM'S LENGTH PRINCIPLE WITH FORMULARY APPORTIONMENT 

• Página 600-605 

Autor/es: Lapidoth, A 

Título: THE 2002 INCOME TAX REFORM IN ISRAEL 

• Página 606-619 

Autor/es: Cockfield, AJ 

Título: THE LAW AND ECONOMICS OF DIGITAL TAXATION: 

CHALLENGES TO TRADITIONAL TAX LAWS AND PRINCIPLES 

• Página 620-626 

Autor/es: MartinJimenez, AJ 

Título: DOMESTIC ANTI-ABUSE RULES AND DOUBLE TAXATION 

TREATIES: A SPANISH PERSPECTIVE - PART

BULLETIN FOR INTERNATIONAL FISCAL DOCUMENTATION 2000

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