Lecture notes International Taxation + Exam questions | 16/20 | KU Leuven | 2025/26

International Taxation
PART 1: INTRODUCTION AND GENERAL CONCEPTS .......................................................................................... 6
DEFINITION AND SOURCES ......................................................................................................................................... 6
States' Power to Tax ....................................................................................................................................... 8
Influence of EU law ......................................................................................................................................... 9
International guidelines / recommendations (soft law) ............................................................................... 10
Bilateral treaties ........................................................................................................................................... 10
BASIC PROBLEMS OF INTERNATIONAL TAX LAW ............................................................................................................ 11
Power (or jurisdiction) to tax derived from sovereignty ............................................................................... 11
Limited and unlimited tax liability ................................................................................................................ 12
Purpose of tax treaties ................................................................................................................................. 15
The importance of the OECD MC .................................................................................................................. 16
Other Models? .............................................................................................................................................. 16
Historical background of the OECD Model Convention ................................................................................ 16
Recent developments: BEPS Action Plans 2015 ............................................................................................ 20
United Nations – Terms of Reference (ToR).................................................................................................. 21
GENERAL CHARACTERISTICS OF TAX TREATIES (6 CARDINAL RULES) ................................................................................... 22
OECD MODEL TAX CONVENTION 2017 ........................................................................................................... 25
SCOPE OF THE CONVENTION .................................................................................................................................... 25
SCOPE OF THE CONVENTION: ARTICLE 1 ........................................................................................................ 26
SCOPE OF THE CONVENTION: ARTICLE 1(1) ................................................................................................................ 26
Treaty entitlement of certain entities: public entities .................................................................................. 26
Treaty entitlement of certain entities: collective investment vehicles (‘CIV’) ............................................... 27
SCOPE OF THE CONVENTION: ARTICLE 1(2) ................................................................................................................ 28
Treaty entitlement of certain entities: partnerships ..................................................................................... 28
SCOPE OF THE CONVENTION: EXCURSUS..................................................................................................................... 30
Distinction between subsidiary and branch: example .................................................................................. 30
Impact of EU law on tax treaty application: Compagnie de Saint-Gobain ................................................... 31
TAXES COVERED (ART. 2) ................................................................................................................................ 34
SCOPE OF THE CONVENTION: ARTICLE 2 ..................................................................................................................... 34
Example: the Net Asset Taks ........................................................................................................................ 34
DEFINITIONS (ART. 3-5) .................................................................................................................................. 36
DEFINITIONS: ARTICLE 3.......................................................................................................................................... 36
Article 3 (1) ................................................................................................................................................... 36
General rule of interpretation (Art. 31-33 VCLT) .......................................................................................... 37
Article 3(2) .................................................................................................................................................... 40
Article 3(2) – Freens case (Belgian Supreme Court 21/12/90) ...................................................................... 40
Article 3(2) – BE Supreme Court on BE pensions (5/12/2003) ...................................................................... 42
Article 3(2) – Conclusions ............................................................................................................................. 43
DEFINITIONS: ARTICLE 4.......................................................................................................................................... 43
Art. 4, para. 1: Definition .............................................................................................................................. 44
Art. 4, para. 1................................................................................................................................................ 44
Art. 4, para. 2: Tie-breaker rule for individuals............................................................................................. 45
Art. 4, para. 3: Tie-break rule for companies ................................................................................................ 46
PERMANENT ESTABLISHMENT – ART. 5 .......................................................................................................... 47
1) FIXED PLACE OF BUSINESS .................................................................................................................................... 48
→Examples (para. 2): ................................................................................................................................... 49
→Special rule for building site, construction or installation project: 12-month test (para. 3) ..................... 50
→Exceptions (para. 4): Auxiliary and preparatory activities ........................................................................ 52


1

, 2) AGENCY PE ...................................................................................................................................................... 57
1. An agent is a PE IF (Art. 5 (5): ................................................................................................................... 58
2. An independent agent is not a PE ............................................................................................................. 62
BEPS concerns regarding agents .................................................................................................................. 65
BEPS solves following issues ......................................................................................................................... 66
SERVICE PE .......................................................................................................................................................... 66
PRINCIPLES IN PRACTICE: DIGITAL ECONOMY ................................................................................................ 68
HOW TO TAX PROFITS IN STATE OF CONSUMER? ........................................................................................................... 68
EXAMPLE: E-TRADERS............................................................................................................................................. 69
Website, server, preparatory and auxiliary services, smart server, ISP ........................................................ 69
Warehouse in between ................................................................................................................................. 71
Changes in 2017 ........................................................................................................................................... 71
Interim conclusion – issues and solution ...................................................................................................... 72
EXAMPLE: DIGITAL PLATFORMS ................................................................................................................................. 73
Taxation of DPC in host state? ..................................................................................................................... 74
See CJEU, 20.12.2017, C-434/15, Asociación Profesional Élite Taxi v Uber Systems Spain SL ...................... 76
WAYS FORWARD ................................................................................................................................................... 76
LATEST DEVELOPMENTS .......................................................................................................................................... 78
PERMANENT ESTABLISHMENT – CASE STUDIES PART I ................................................................................... 79
TAXATION OF INCOME AND CAPITAL ............................................................................................................. 82
IMMOVABLE PROPERTY – ART. 6 ............................................................................................................................... 82
ASSOCIATED ENTERPRISES – TRANSFER PRICING ART. 9(1) ............................................................................................. 83
Art 9 OECD Model ......................................................................................................................................... 85
Two types of associated enterprises ............................................................................................................. 85
“Upward profit adjustment” as a result of transfer mispricing .................................................................... 86
OECD TP guidelines for MNE’s (MultiNational Enterprise) ........................................................................... 88
Arm’s Length Principle (ALP) ........................................................................................................................ 89
First Method: Comparable Uncontrolled Price Method (‘CUP’) (TPG 2.14 et seq.) ...................................... 91
Second Method: Resale price method (TPG 2.27 et seq) .............................................................................. 94
Third Method: Cost plus method (TPG 2.45 et seq) ...................................................................................... 97
Fourth method: (“Transactional net profit methods”) ................................................................................. 99
Profit Split Method (“PSM”) example ......................................................................................................... 100
Conclusion .................................................................................................................................................. 100
Importance of Country by Country-reporting by MNE’s and of mandatory exchange of rulings between tax
authorities (within EU and outside EU) (BEPS ACTION 5 & 13; see supra) ................................................. 101
To the next chapter .................................................................................................................................... 101
ASSOCIATED ENTERPRISES – TRANSFER PRICING ART. 9(2) ........................................................................................... 102
ART. 7: PROFITS OF A PERMANENT ESTABLISHMENT: OUTLINE ................................................................... 107
A. THE OLD APPROACH (ART. 7 OF THE PRE 2010 OECD MC) .................................................................................... 107
1. General features ..................................................................................................................................... 107
Term “profits” (old approach) .................................................................................................................... 108
Notion “profits attributable to a PE” / “profits of a PE” (old approach) .................................................... 109
B. THE NEW APPROACH: AOA UNDER ART. 7 OF THE 2010 OECD MC ........................................................................ 110
1. General features ..................................................................................................................................... 110
2. Calculating the profits of the PE under the AOA ..................................................................................... 111
3. The symmetrical application of the new approach ................................................................................ 114
C. OVERVIEW: OLD VERSUS NEW APPROACH ............................................................................................................. 116
INTERNATIONAL TRANSPORTATION INCOME (ART. 8) ................................................................................. 117
WHAT INCOME IS COVERED BY ART. 8? .................................................................................................................... 118
PASSIVE INCOME .......................................................................................................................................... 119
DIVIDENDS (ART. 10) .................................................................................................................................... 120


2

, TAXING RIGHTS.................................................................................................................................................... 120
NEW BEPS ACTION 6 (TREATY ABUSE) .................................................................................................................... 122
WHY NO SINGLE TAXATION? .................................................................................................................................. 123
SOME CASES ....................................................................................................................................................... 123
Case 1 ......................................................................................................................................................... 123
Case 2 ......................................................................................................................................................... 124
Case 3 ......................................................................................................................................................... 124
Case 4 ......................................................................................................................................................... 126
PARENT/SUBSIDIARY DIRECTIVE 90/435 (AMENDED BY DIR 2011/96, 2014/86 & 2015/21) ....................................... 126
Case 1 ......................................................................................................................................................... 127
Case 2 ......................................................................................................................................................... 128
Case 3 ......................................................................................................................................................... 128
Case 4 ......................................................................................................................................................... 128
Placeholder slide ......................................................................................................................................... 129
INTEREST (ART. 11) ....................................................................................................................................... 129
CASE ................................................................................................................................................................. 130
SHARED TAXING RIGHTS ........................................................................................................................................ 131
EXAMPLES: ......................................................................................................................................................... 132
Example 1 ................................................................................................................................................... 132
Example 2 ................................................................................................................................................... 132
Example ...................................................................................................................................................... 133
ROYALTIES (ART. 12) .................................................................................................................................... 134
INTEREST & ROYALTY DIRECTIVE 2003/49 OF 3 JUNE 2003 ....................................................................................... 137
CAPITAL GAINS (ART. 13).............................................................................................................................. 139
GENERAL RULE .................................................................................................................................................... 139
EXCEPTIONS ARE IN THE PARAGRAPHS 1-4 ................................................................................................................ 139
EXIT TAX COMPATIBLE WITH ART. 13 (5) OECD MC? ................................................................................................ 141
INCOME FROM INDEPENDENT PROFESSIONAL SERVICES (FORMER ART. 14) ............................................... 142
PASSIVE INCOME CASE STUDIES PART 2 ....................................................................................................... 143
QUESTION 1: JEROME .......................................................................................................................................... 143
2. WORLDWIDE VENTURES.................................................................................................................................... 145
INCOME FROM EMPLOYMENT (ART. 15) ...................................................................................................... 148
GENERAL REMARKS .............................................................................................................................................. 148
BASIC RULE ......................................................................................................................................................... 149
“SALARIES, WAGES AND OTHER SIMILAR REMUNERATION IN RESPECT OF EMPLOYMENT” .................................................... 149
EMPLOYMENT/EMPLOYER ..................................................................................................................................... 151
Case 1 ......................................................................................................................................................... 151
Case 2 ......................................................................................................................................................... 151
Case 3 ......................................................................................................................................................... 152
Further ........................................................................................................................................................ 152
ARTICLE 15(2): EXCEPTION TO BASIC RULE ............................................................................................................... 155
Condition 1: Employee present in work state for period(s) not exceeding in aggregate 183 days in any 12
month-period commencing/ending in fiscal year concerned ..................................................................... 156
Condition 2: the remuneration is not paid by, or on behalf of, an employer who is a resident of the work
state............................................................................................................................................................ 157
Condition 3: the remuneration is not borne by a PE which the employer has in the work state ................ 159
SALARY SPLITTING (EXAMPLE)................................................................................................................................. 160
EMPLOYMENT ABOARD SHIP OR AIRCRAFT (ART. 15 (3)) ............................................................................................. 160
DIRECTOR’S FEES (ART. 16) ........................................................................................................................... 162
ENTERTAINERS AND SPORTSPERSONS (ART. 17) .......................................................................................... 163


3

, MAIN RULE: PRIMARY TAXING RIGHTS TO STATE OF PERFORMANCE (ART. 17 (1)) ............................................................ 164
Entertainer.................................................................................................................................................. 165
Sportpersons ............................................................................................................................................... 165
Determination of place of performance ..................................................................................................... 166
Special and combined cases ....................................................................................................................... 166
ANTI-ABUSE PROVISION (ART. 17 (2)) ..................................................................................................................... 169
PENSIONS (ART. 18) ..................................................................................................................................... 170
“PENSIONS AND OTHER SIMILAR REMUNERATION”...................................................................................................... 171
TRANSFER OF RESIDENCE UPON RETIREMENT ............................................................................................................. 171
GOVERNMENT SERVICES (ART. 19) ............................................................................................................... 174
SALARIES (ART. 19(1)) ......................................................................................................................................... 174
PENSIONS (ART. 19(2)) ........................................................................................................................................ 175
STATE OWNED ENTERPRISES (ART. 19(3)) ................................................................................................................ 175
STUDENTS (ART. 20) ..................................................................................................................................... 176
OTHER INCOME (ART. 21) ............................................................................................................................. 177
TAXATION OF CAPITAL (ART. 22) .................................................................................................................. 177
METHODS FOR THE ELIMINATION OF DOUBLE TAXATION (ART. 23) ............................................................ 178
SCOPE AND SOLUTIONS ......................................................................................................................................... 178
METHODS FOR ELIMINATION OF JURIDICAL DOUBLE (NON) TAXATION ............................................................................. 179
EXEMPTION METHOD ........................................................................................................................................... 179
EXEMPTION METHOD: POLICY CONSIDERATIONS (NIET KENNEN) .................................................................................... 182
CREDIT METHOD .................................................................................................................................................. 182
CREDIT METHOD: POLICY CONSIDERATIONS (NIET KENNEN) .......................................................................................... 184
EXAMPLE ........................................................................................................................................................... 185
EXEMPTION METHOD: APPLICATION TO INTEREST AND DIVIDEND ................................................................................... 185
RELIEF FOR ECONOMIC DOUBLE TAXATION ................................................................................................................ 186
PRINCIPLE OF NON-DISCRIMINATION (ART. 24) ........................................................................................... 188
SCOPE OF ARTICLE 24........................................................................................................................................... 189
DISCRIMINATION ON THE BASIS OF NATIONALITY (ART. 24(1)) ..................................................................................... 189
When do we have a discrimination? .......................................................................................................... 190
Step 1: Comparability-analysis: .................................................................................................................. 190
Step 2: Disadvantage .................................................................................................................................. 192
DISCRIMINATION OF PERMANENT ESTABLISHMENTS (ART. 24(3)) ................................................................................. 193
Comparability: ............................................................................................................................................ 193
Disadvantage.............................................................................................................................................. 194
DEDUCTIBILITY (ART. 24(4)) ................................................................................................................................. 194
Scope of application: .................................................................................................................................. 195
Comparability ............................................................................................................................................. 195
Disadvantage.............................................................................................................................................. 196
Domestic thin capitalization rules .............................................................................................................. 196
DISCRIMINATION OF FOREIGN-OWNED ENTERPRISES (ART. 24(5)) ................................................................................ 197
Scope of application ................................................................................................................................... 197
Comparability ............................................................................................................................................. 197
Disadvantage:............................................................................................................................................. 198
MUTUAL AGREEMENT PROCEDURE (ART. 25) .............................................................................................. 198
A) TAXATION NOT IN ACCORDANCE WITH THE PROVISIONS OF THE CONVENTION (ART. 25 (1) AND (2)) ............................... 198
B) DIFFICULTIES IN INTERPRETATION OR APPLICATION (ART. 25(3)) ............................................................................... 199
BINDING ARBITRATION .......................................................................................................................................... 199
EXCHANGE OF INFORMATION (EOI) (ART. 26) .............................................................................................. 199


4

,ASSISTANCE IN THE COLLECTION OF TAXES (ART. 27) ................................................................................... 200
MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS (ART. 28) ..................................................... 201
TERRITORIAL EXTENSION (ART. 30) .............................................................................................................. 201
ENTRY INTO FORCE (ART. 31) ....................................................................................................................... 201
TERMINATION (ART. 32)............................................................................................................................... 201
THE PRINCIPAL PURPOSE TEST (THE PPT) ..................................................................................................... 202
INTRODUCTION ................................................................................................................................................... 202
TREATY SHOPPING................................................................................................................................................ 202
DOWNSIDES OF TREATY SHOPPING .......................................................................................................................... 204
ARTICLE 29(9) OECD MODEL ............................................................................................................................... 204
Denial of benefits (first part) ...................................................................................................................... 205
First test: obtaining tax treaty benefit is one of the principal purposes ..................................................... 205
Second test: frustrates the object and purpose of the treaty provision ..................................................... 206
Recap .......................................................................................................................................................... 207
EXAMPLE OECD COMMENTARIES – EXAMPLE G ........................................................................................................ 208
EXAMPLES OECD COMMENTARIES ART. 29, § 182 ................................................................................................... 209
LIMITATION ON BENEFITS (LOB) ............................................................................................................................ 210
PILLAR TWO – A BRIEF OVERVIEW OF THE GLOBAL MINIMUM TAX ............................................................. 210
BRIEF OVERVIEW OF THE LEGISLATIVE HISTORY ........................................................................................................... 211
In the past, there has been some improvements ....................................................................................... 212
IMPLEMENTATION OF GLOBAL MINIMUM TAX ............................................................................................................ 213
CONTENT OF PILLAR TWO ..................................................................................................................................... 214
4 for the price of 1: the rules of Pillar Two ................................................................................................. 214
GloBE: 5 steps ............................................................................................................................................. 215
Step 1: Scope .............................................................................................................................................. 215
Step 2: Determine GloBE Income or Loss .................................................................................................... 216
Step 3: Determine Adjusted Covered Taxes ................................................................................................ 217
Step 4: Calculate ETR and Top-Up Tax per jurisdiction ............................................................................... 218
Step 5: Collection of the minimum tax........................................................................................................ 218
CASE STUDY ................................................................................................................................................. 221
QUESTION 1: ROOS BEEF (10PT.) ........................................................................................................................... 221
2. DECABEL (10PT.) ............................................................................................................................................. 223
EXAM JANUARY 2026 ................................................................................................................................... 224
CASE 1 ........................................................................................................................................................... 224
CASE 2 ........................................................................................................................................................... 227
BONUS QUESTION.......................................................................................................................................... 231




5

,Part 1: Introduction and general concepts
Definition and sources
Definition: “all rules that determine where and how, in a cross-border context, specific income of a
taxpayer may be taxed and how this tax must be assessed and recovered”
- No fixed definition, but this works
- A field of law that involves conflict of rules of law
o Vb. BE wants to tax you -> BE income tax code, there is a rule: a person has to pay
taxes; but in international context, there are limitations to the Belgian rules
o So international rules limit the national rules -> conflict of rules

No separate set of rules (not a list of rules that apply everywhere), but various sources of law (a
selection of rules, from several institutions on several levels)
- national tax laws (PM) -> we will not see this in class
o we will only look at the interaction between the national laws and the international
law in abstracto
o how do they clash with roles of international taxation
- (mostly unwritten) general principles of international tax law
o Customary international law (internationaal gewoonterecht) -> we all agree on these
rules
o A lot of these rules have been codified vb. rules now in the Vienna convention
o A lot of these rule sound simple but are very important
o Vb. BE can tax our residents, but only on income realized on our territory -> more
general: we can only tax a person if he has a link to the Belgian territory
▪ vb. You are a tax payer in Spain, you work in Spain, you never leave Spain ->
Belgium can never tax you
- EU law
o More and more influence of EU law on international law -> this makes it more and
more complex
- international guidelines (in particular OECD material)
o They have issued tons of guidelines, including the OECD convention, which is the basis
for the second part of this court
o This is soft law, non binding, but with a huge influence -> basis for binding double
taxation treaties
- bilateral treaties
o Tax treaties
o Investment treaties (see later also)




6

, This is what international taxation
was 20 years ago.
- The person obliged the
national tax codes
- But on top of that, you
had the international tax
rule set, often in bilateral
tax treaties
- Quite easy -> two rule
sets




Over the last years, it has gotten
more complex and multilayered.

EU law interferes with the basis
idea with international and
domestic law.




What is relevant? We will not deal with all these concepts in detail
- We can not divide people for tax based on differences that are discriminating
- State aid rules: states are free to shape their tax system. But in some cases, Europe says: you
are distorting the market because you are advantaging a group. So states have less and less
power to shape their systems
- States have the obligation to adopt certain rules. Vb. ECHR/Charter -> human rights become
more and more applicable also to state law
- Vb. Right to property -> incomers say: when we have to pay 90% tax on our property, this
violates the right to property
- Vb. Right to a fair trail -> tax courts take very long, is this fair?
- Vb. Privacy rules -> you have to submit certain details about yourself for your tax documents,
does this violate the privacy rules?
- MLI -> treaty that was concludes between several states, a lot of rules there
- STTR -> a treaty based rule that protects the developing countries
- AMOUNT A -> very complex, also transfer pricing issue
- UN MF -> united nations have started an initiative on redesigning the entire international tax
system. They said: currently the international taxation is dominated by rich countries. We want
to redevelop the entire international tax system. Negotiations are now ongoing.
This gives the entire picture of the international tax level




7

,States' Power to Tax
- Derived from their sovereignty = the right for a state to regulate its affairs through its
governmental institutions
o State can do as it pleases = sovereignty
o At one point in time, the earth was a place of chaos, we try to create order in the
chaos. This order is realized by a social contract. We created a sovereign state. This
state has the right and the duty to stay alive. How? With resources. This resources
come from tax money. The state can than offer services to the people.
o These services to people have increased until now: the modern state -> the services
provide a safety net: vb. when you can no longer work (too old or sick) (sociale
zekerheid)
o Sovern entity has jurisdiction over you

- Why does the government need taxes?
o Preventing inequality: The government takes money form the rich and gives it to the
poor
▪ Vb. Inheritance -> tax on that will go to others because the dead person
doesn’t need it anymore
o Financial function of taxes: state needs money to fund schools, policemen
(ambtenaren)
o Influencing tax payer behavior: government uses taxes as an incentive for behavior.
Tax payers don’t like taxes. The government prevents bad behavior by increasing taxes
on that type of behavior (social goal)
▪ Vb. Duties on alcohol or cigarettes (accijnzen)
- Not unlimited: requires a nexus or connection.
o States can tax based on a “genuine link” = customary international law. See also The
Case of the S.S. Lotus (Fr. v. Turk.), 1927 P.C.I.J. (ser. A) No. 10 (Sept. 7)
o Where does double taxation come in to play?
o He will tell it with a very important case: the Lotus Case
o Case: unfortunate day on the sea. There was a ship, the Lotus, a French ship, sailing
the high seas, in the middle of nowhere. By a tragedy, the ship crashed into another
Turkish ship. The Turkish ship sunk, killing some Turkish sailor. Some sailors could
climb on the Lotus. They sailed to Turkey. When arriving there, the captain of the Lotus
was arrested for killing the Turkish sailors. France was not happy: what makes Turky
competent to arrest our captain, why does Turkey have jurisdiction over the captain?
It went to the court of justice. They said: Turkey was competent to arrest the captain.
The court said some interesting things (see paragraph on the slide)
o “Now the first and foremost restriction imposed by international law upon a State is
that – failing the existence of a permissive rule to the contrary – it may not exercise its
power in any form in the territory of another State. In this sense jurisdiction is certainly
territorial; it cannot be exercised by a State outside its territory except by virtue of a
permissive rule derived from international custom or from a convention.” (para 45)
o = in order for a state to have jurisdiction, there has to be a link to the state’s territory.
This is international customary law. States have made use of this rule, already before
the Lotus case.




8

, - Taxation is not permissible without any connection between the taxpayer/transaction and the
state’s territory
o States are also free to decide on this connection with your state. This is where the
problems start. States have adopted different connecting factors
o For example: Determined by national tax law
▪ USA: nationality principle
• As soon as you are an citizen of USA, you pay USA taxes, even if you
don’t live in the USA anymore
▪ Belgium: residence principle
• We will tax you on your worldwide income if you are a Belgian tax
resident (belgische rijksinwoner).
▪ Hong-Kong: territoriality principle: only income that is sourced on HK territory
- also for resident taxpayers – is taxed in HK
• Less common – only 3 states: Hong Kong, Singapore and Eritrea
• Only tax on income that is sources on its own territory – very lenient -
> this is why a lot of companies go there. Than they don’t have to pay
taxes on what they sell in other countries, but only on the income in
Hong Kong
▪ Issue between USA and Belgium: X says ‘I live in Belgium, our son was born in
USA, so we decided to give hem the USA nationality, but he lives in Belgium.
Now the son has to pay USA taxes because he has the USA nationality, but also
Belgian taxes because he lives in Belgium’ -> problem

Influence of EU law
Not harmonized: national jurisdictions can choose themselves on direct taxations (personal or
corporate tax). Indirect taxes was more harmonizes. But after a while, EU found a way around this.
They made rules to protect the internal market and in that way, EU interfered with the domestic rules

Relevant provisions in TFEU
- General non-discrimination principle (Art. 18)
- Fundamental freedoms: free movement within internal market (Art. 26 §2): goods (Art. 28 et
seq), persons (Art. 21) employment (Art. 45 et seq), establishment (Art. 49 et seq), services
(Art. 56 et seq), capital (Art. 63 et seq))
- Prohibition on (fiscal) state aid (Art. 107-108)

Increasing impact of European Court of Justice case law (also in the field of tax treaties), illustration:
CJEU 28.01.1986 “Avoir Fiscal”
- First case dealing with European influence on direct tax measures -> alleged discrimination
- Case: a German insurance company that was active in France. The German company paid
higher taxes than French insurance companies in France. German company said: this is
discriminations and this affects the internal market. The court went with this reason. A lot of
similar cases came after that, all of them with ‘discrimination’ as argument.

Positive measures -> some things are better regulated at the EU level -> very good rules, so good that
they are adopted worldwide.




9

, Income Tax Directives
- Directive on Mutual assistance between tax authorities (1977) replaced by new Directive (DAC)
adopted 15 Feb 2011 + (many recent amendments to allow (i) automatic exchange of bank
info on investment income (ii) rulings), (iii) critical information on multinationals; (iv) disclosure
obligations of tax consultants on planning structures etc..
o Gather information form tax payers. Vb. Belgian taxes you on your worldwide income,
but if you don’t give the fiscus your assets abroad, how can the fiscus know your
abroad income. Now there is a working together between states to report this to the
tax authorities.
- Parent-Subsidiary Directive (1990, recast 2011 with later amendments)
- Merger Directive (1990 recast 2009 with later amendments)
- Savings Directive (2003 with later amendments, now repealed)
- Interest & Royalty Directive (2003)
- Anti Tax Avoidance Directive I and II (“ATAD”, 2016/2017)
- Tax Dispute Resolution Mechanisms Directive (2017 + Arbitration Convention)
- Global Minimum Taxation of Multinationals (2022)

International guidelines / recommendations (soft law)
OECD Guidelines: a few examples (see also infra):
- Reports on Taxation of Electronic Commerce (2000 and following)
- Transfer Pricing Guidelines (1995-1999-2010-2017-2022)
- Report on Harmful Tax Competition (1998)
- Report on Attribution of profits to permanent establishments (2008)
- Base Erosion & Profit Shifting (“BEPS”) of October 2015: 15 Reports (see infra)
o Initiative of the OECD
o No hardcore tax planning anymore
o We will see how this has influenced our taxes

EU Commission: a few examples
- Code of conduct against harmful tax competition (1997) (reform)
- Recommendation on Fair & Efficient corporate tax system (2015)

Bilateral treaties
This course focuses on (bilateral) tax treaties
- 2 main types of model treaties: OECD and UN (see also infra)
- Main focus : OECD Model Tax Convention 2017 + Commentary
o 3000-4000 treaties in force at the moment -> but it is only relevant to discuss one
treaty -> OECD Model Tax Convention
o 95% of all tax treaties worldwide are based on this model treaty -> this treaty is soft
law, non binding, but most states tend to follow this model
o 32 articles that we will discuss. Core of the international tax treaties. Many of the
treaties are a copy paste of this model treaty. This makes things easy for us
o Also the OECD had made a document for the interpretation of the model an how it
should be implemented
- (In addition many national Model tax treaties: the U.S. Model, the Dutch Model, the Belgian
Model, etc.)
o Some countries made an own model, that deviates a little bit




10