Course outline

Day 1 – Interpretation and application of tax treaties

Principles of international taxation relevant for the application of tax treaties
o Purpose and benefits of tax treaties
o Types of tax treaties

Model conventions
o Relationship between tax treaties and domestic law

Residence issues
o Importance of the concept of residence
o Dual residence and the tie-breaker clause
o Remittance basis – UK
o Nationality taxation – US
o Permanent establishments and business profits
o The concept of permanent establishment in general
o The definition of P.E. under tax treaties – Art 5 OECD model
o Taxation of business profits

Dividends, interest and royalties
o Structure of provisions
o Beneficial ownership
o Definition of dividends, interest and royalties (under treaties)
o Branch profits tax
o Source rules

Capital gains
o Main rules
o Specific problems

Double taxation relief under tax treaties
o Exemption method
o Credit method
o Avoidance of double taxation on foreign source income
o Tax sparing credit

Tax treaties and tax planning
o Treaty shopping
o Anti-treaty shopping provisions

Interpretation of tax treaties
o The OECD model
o Different classification as a tool in international tax planning
o Vienna Convention

Day 2 – Hybrid entities

Hybrid entities in tax planning – overview
o What is a hybrid entity and a reverse hybrid?
o Tax subjects and transparent entities

Case study 4 — OECD Example 1

Domestic law legal forms and categorisation
o The United States
o Germany
o Sweden
o France
o Belgium
o United Kingdom – LLPs

US check the box rules

The OECD report on “The Application of the OECD Model Tax Convention to Partnerships”
o When is a partnership entitled to treaty benefits?
o Is a partnership a person?
o Is a partnership a resident of a contracting state”
o Is the partnership liable to tax
o Can the partnership be liable to tax and not be a resident?
o What if the partnership is not a resident?

Case studies 5 & 6: OECD examples

Taxation of partnerships and other legal forms
o Germany
o Australia
o France

Selected tax planning techniques using hybrid entities
o US check-the-box for US tax planning
o Using an LLC for Canadian tax planning
o Using a UK LLP for trading
o Profit sharing loans or profit participating loans
o Silent partnerships
o UK-French tax planning – the SNC structure

Case study 7 – Dividend from A to B

Case study 8 – Danish company with Spanish income

Day 3 – Hybrid financial instruments and financing

What is a hybrid instrument?

Equity finance
o Who holds equity?
o What is the nature of the various types of equity?
o Why do the various types of equity exist?

Debt finance
o Who holds debt?
o What is the nature of the various types of debt?

Tax implications in general
o Equity
o Debt

Identification and classification
o Who is the taxpayer (and according to the law of which state)?
o What type of income are we dealing with?

o Types of hybrids
o Redeemable preference shares

o Characteristics of debt and equity
o Classification of hybrids

Debt versus equity – Withholding tax implications under tax treaties
o The treatment of hybrids under tax treaties
o Double taxation relief
o Some tax planning structures/ case studies
o Using definitional mismatches – U.S. – U.K Hybrid instrument

Thin capitalisation
o Country overview
o International tax implications
o Planning techniques to avoid thin capitalisation

Source rules
o Dividends

o Royalties
o Lease payments

The effect of tax treaties

Day 4 Topic 1 – Tax efficient financing

Basic issues and financing techniques
o Financing techniques

Double dip financing
o Structuring techniques
o Using limited partnerships

National and international tax issues relevant to international financing
o Withholding taxes
o Timing and currency issues

Withholding tax planning

Triangular situations
o Income derived from a third country by a permanent establishment

Main features and tax aspects of international loans

Finance companies & other vehicles
o Reasons for using a finance company
o Belgian co-ordination centres
o Jersey exempt company
o Luxembourg
o The Netherlands
o Spain – Canary Islands Special Zone – ZEC
o Switzerland

Finance branches
o The finance branch of a Dutch company
o Capitalisation of finance branches

Case study 11 – A triangular case

Day 4 Topic 2 – Selection and use of international holding companies

Tax Factors of importance

o Austria
o Belgium
o Cyprus
o Denmark
o Hungary
o Luxembourg
o Malta
o Malaysia
o Netherlands
o Singapore
o Sweden
o Spain
o Switzerland
o United Kingdom

Case study 12: Selecting a holding company

Day 5 – Full day of case studies

Covering all Silver course topics and international tax planning