2017-2018 Financial Management
International Tax
International Business Management
2IBM
,International Tax – 2IBM
CHAPTER 1 – International Taxation
1. What is internationalisation taxation?
INTERNATIONAL TAXATION: WHAT?
§ International taxation refers to tax levied on the cross-border transaction.
§ The transaction may take place between 2 or more persons/entities in 2 or more countries or tax
jurisdictions.
§ Such a transaction may involve a person in one country with property and income flows in another
country.
§ Evaluating the tax policy choices made by states, particularly in the context of cross-border
structures and the flow of capital, income and persons;
§ Examining the interaction among the various forces that shape international tax law – domestic
law, bilateral treaties, multinational agreements, inter-governmental organizations and even case
law and academic writing.
INTERNATIONAL TAXATION: TYPES
§ Residence based taxation: residents of a country are taxed on their worldwide (local and foreign)
income
§ Source based taxation: only local income from a source inside the country is taxed. Usually non-
residents are taxed only on their local income.
INTERNATIONAL TAXATION: CONCEPT OF DOUBLE TAXATION
§ When a transaction taking place in more than one country such may be subject to more than one
tax authority or taxed twice by same or different tax authorities. Such taxation is called “double
taxation”
è avoidance is required
WHAT TO EXPECT:
§ The course examines international and European legal principles, instruments and
mechanisms to cope with these problems and challenges of double taxation, to enhance
cooperation between tax authorities, to protect the private and business interests and to prevent
international tax disputes.
§ Core to the course will be the OECD Model Convention, that inspired the more than 3000 Tax
Treaties around the world, and the OECD initiatives the “Common Reporting Standard” (CRS)
for tax transparency, and in the business world the “Base erosion and profit shifting Action Plan”
(BEPS), endorsed by the G-20, that are currently been rolled out at high speed.
§ Another major part of the course will focus on the application of the European fundamental
principles of the common market to tax matters, on the limited number of tax directives e.g. to
neutralise (double) taxation that hinders international business and its restructuring, and on the
abundant case law of the European Court of Justice in tax matters enforcing the fundamental EU
principles.
WHAT ARE THE OBJECTIVES?
§ Students should understand the phenomena of international double and multiple taxation, tax
avoidance and evasion and tax competition among states resulting from territorial tax sovereignty
and the modest achievements of tax policy, tax cooperation among states and harmonization in
a globalizing economy.
§ Student should have access to the international legal instruments and mechanisms that govern
the international tax environment of business enterprises and private individuals and apply these
in basic practical situations.
Next: watch video slides – link: https://youtu.be/-Q9Kv_Otd_0
CHAPTER 2 – Personal Income Tax
1. Tax
International Tax 2 2IBM
,TAX?
§ Contribution
§ Government
§ Support for facilities of common interest
o Such as?
FUNCTIONS OF TAKS:
§ Financial function:
o Supply for government spending
o BE: taxes = 94% of overall income for government
§ Economical function:
o Pricing: ex. VAT
o Consumption: ex. Excise
o Investment: ex. Capital gains tax
§ Social function:
o The more income you have à the more tax you should pay
2. Government
à Each government can levy taxes – but!!!:
§ Non Bis In Idem
- “not twice the same thing”
= you can not be taxed twice for the same cause of action (income)
3. Direct
International Tax 3 2IBM
, 4. Personal income
à Global income
à !! Net amount of personal income is taxes!!
YOU MUST DEDUCT FROM GROSS SALARY:
§ Gross salary
- Social contributions
- Actual or fixed rate professional costs
- The dependant spouse allowance and / or assisting spouse deduction
- Exemptions of an economic character (fiscal measures to encourage investment and / or
employment)
- Losses
= Net salary
ACTUAL OR FIXED RATE PROFESSIONAL COSTS:
§ Professional expenses
§ Legal fixed (automatically) or actual expenses (prove your expenses)
WHO?
§ Resident
o Seat of fortune
§ Of age (Be=18)
RATE?
à Progressive tax rate = the more income you have, the higher your rate
International Tax 4 2IBM
International Tax
International Business Management
2IBM
,International Tax – 2IBM
CHAPTER 1 – International Taxation
1. What is internationalisation taxation?
INTERNATIONAL TAXATION: WHAT?
§ International taxation refers to tax levied on the cross-border transaction.
§ The transaction may take place between 2 or more persons/entities in 2 or more countries or tax
jurisdictions.
§ Such a transaction may involve a person in one country with property and income flows in another
country.
§ Evaluating the tax policy choices made by states, particularly in the context of cross-border
structures and the flow of capital, income and persons;
§ Examining the interaction among the various forces that shape international tax law – domestic
law, bilateral treaties, multinational agreements, inter-governmental organizations and even case
law and academic writing.
INTERNATIONAL TAXATION: TYPES
§ Residence based taxation: residents of a country are taxed on their worldwide (local and foreign)
income
§ Source based taxation: only local income from a source inside the country is taxed. Usually non-
residents are taxed only on their local income.
INTERNATIONAL TAXATION: CONCEPT OF DOUBLE TAXATION
§ When a transaction taking place in more than one country such may be subject to more than one
tax authority or taxed twice by same or different tax authorities. Such taxation is called “double
taxation”
è avoidance is required
WHAT TO EXPECT:
§ The course examines international and European legal principles, instruments and
mechanisms to cope with these problems and challenges of double taxation, to enhance
cooperation between tax authorities, to protect the private and business interests and to prevent
international tax disputes.
§ Core to the course will be the OECD Model Convention, that inspired the more than 3000 Tax
Treaties around the world, and the OECD initiatives the “Common Reporting Standard” (CRS)
for tax transparency, and in the business world the “Base erosion and profit shifting Action Plan”
(BEPS), endorsed by the G-20, that are currently been rolled out at high speed.
§ Another major part of the course will focus on the application of the European fundamental
principles of the common market to tax matters, on the limited number of tax directives e.g. to
neutralise (double) taxation that hinders international business and its restructuring, and on the
abundant case law of the European Court of Justice in tax matters enforcing the fundamental EU
principles.
WHAT ARE THE OBJECTIVES?
§ Students should understand the phenomena of international double and multiple taxation, tax
avoidance and evasion and tax competition among states resulting from territorial tax sovereignty
and the modest achievements of tax policy, tax cooperation among states and harmonization in
a globalizing economy.
§ Student should have access to the international legal instruments and mechanisms that govern
the international tax environment of business enterprises and private individuals and apply these
in basic practical situations.
Next: watch video slides – link: https://youtu.be/-Q9Kv_Otd_0
CHAPTER 2 – Personal Income Tax
1. Tax
International Tax 2 2IBM
,TAX?
§ Contribution
§ Government
§ Support for facilities of common interest
o Such as?
FUNCTIONS OF TAKS:
§ Financial function:
o Supply for government spending
o BE: taxes = 94% of overall income for government
§ Economical function:
o Pricing: ex. VAT
o Consumption: ex. Excise
o Investment: ex. Capital gains tax
§ Social function:
o The more income you have à the more tax you should pay
2. Government
à Each government can levy taxes – but!!!:
§ Non Bis In Idem
- “not twice the same thing”
= you can not be taxed twice for the same cause of action (income)
3. Direct
International Tax 3 2IBM
, 4. Personal income
à Global income
à !! Net amount of personal income is taxes!!
YOU MUST DEDUCT FROM GROSS SALARY:
§ Gross salary
- Social contributions
- Actual or fixed rate professional costs
- The dependant spouse allowance and / or assisting spouse deduction
- Exemptions of an economic character (fiscal measures to encourage investment and / or
employment)
- Losses
= Net salary
ACTUAL OR FIXED RATE PROFESSIONAL COSTS:
§ Professional expenses
§ Legal fixed (automatically) or actual expenses (prove your expenses)
WHO?
§ Resident
o Seat of fortune
§ Of age (Be=18)
RATE?
à Progressive tax rate = the more income you have, the higher your rate
International Tax 4 2IBM
