TAXATION OF CAPITAL GAINS UNDER THE OECD MODEL CONVENTION WITH SPECIAL REGARD TO IMMOVABLE PROPERTYPDF电子书下载

Chapter Ⅰ The Capital Gains Article in the Model Conventions Drafted Under the Auspices of the League of Nations 1

1. International Double Taxation after World War 1 1

2. 1923 Report 4

2.1 Economic Consequences of International Double Taxation 6

2.2 Basis of Taxation and the Elements of Economic Allegiance 6

2.3 Economic Allegiance and Classification of Wealth for Tax Purposes 9

2.4 General Methods of Avoiding Double Taxation 22

3.1925 Report 23

4.1927 Draft 25

5.1928 Drafts 28

5.1 1928 Report 28

5.2 1928 Drafts No.la and Ic 31

5.2.1 Article 2 - Income from Immovable Property 32

5.2.2 Article 3 - Income from Bonds, Loans and Deposits and Article 4 - Income from Shares 38

5.2.3 Article 5 - Business Income 39

5.2.4 Article 9 - Annuities 40

5.2.5 Article 10 - Personal Taxes 44

5.2.6 Article 12 - Property Taxes 45

5.3 1928 Draft No.Ib 47

6. Non-Inclusion of Capital Gains in the 1927 and 1928 Drafts 47

7. Work of the Fiscal Committee 1929-1939 56

7.1 1929 Report and 1930 Report 56

7.2 1931 Plurilateral Drafts 58

7.3 1933 Draft and 1935 Draft 59

7.4 1936-1939 Reports 62

8. 1940 Drafts 65

8.1 Work of the Fiscal Committee in 1940 65

8.2 Carroll’s 1940 Draft 65

8.2.1 Carroll’s 1940 Study 65

8.2.2 Article Ⅷ - Gains Derived from the Sale of Immovable Propetyy 67

8.2.3 Article Ⅻ - Gains Derived from the Sale or Exchange of Capital Assets Other than Immovable Property 70

8.3 1940 Hague Draft 75

8.3.1 1940 Hague Report 75

8.3.2 Article 12 - Capital Gains 77

8.3.3 Article 12（1） - Gains Derived from the Sale or Exchange of Real Property 79

8.3.4 Article 12（2） - Gains Derived from the Sale or Exchange of Business Property 80

8.3.5 Article 12（3） - Gains Derived from the Sale or Exchange of Other Capital Assets 82

8.4 1940 Mexico Draft 83

8.4.1 1940 Mexico Report 83

8.4.2 Article 12 - Capital Gains 86

8.4.3 First Step in the Revision of the 1928 Drafts 90

9. 1943 Mexico Draft 92

9.1 Work Accomplished Between First and Second Regional Tax Conferences 92

9.2 1943 Mexico Report 99

9.3 Article Ⅻ - Capital Gains 100

9.3.1 Limited Scope 100

9.3.2 Gains Derived from the Sale or Exchange of Real Property 113

10.1946 London Draft 114

10.1 Reconsideration of 1943 Mexico Draft 114

10.2 1946 London Report 115

10.3 Article Ⅻ - Capital Gains 117

10.3.1 Scope 117

10.3.2 Article Ⅻ（1） - Gains Derived from the Sale or Exchange of Real Property 118

10.3.3 Article Ⅻ（2） - Gains Derived from the Sale or Exchange of Business Assets 118

10.3.4 Article Ⅻ（3） - Gains Derived from the Sale or Exchange of Other Capital Assets 119

Chapter Ⅱ Definition of Capital Gains in Article 13 of the OECD Model 121

1. Definition of Capital Gains in Domestic Systems 121

1.1 Conceptual Problems in Defining Capital Gains for Tax Purposes 121

1.2 Historical Development of Capital Gains Taxation 123

1.3 Lack of an International Common Definition of Capital Gains 126

1.4 No Generally Accepted Approach to Capital Gains Taxation 127

1.5 Capital Gains Taxation: Main Issues 128

1.5.1 Criteria for Type of Tax Regime 129

1.5.2 Definition of Capital Asset 131

1.5.3 Realization Requirement 131

1.5.4 Definition of Alienation 132

1.5.5 Bunching 133

1.5.6 Calculation 133

1.5.7 Anti-Abuse 134

2.Nature Of Capital Gains Under the OECD Model 137

3.Gains Covered by Article 13 142

3.1 The Term ‘Capital Gains’ 142

3.1.1 Use of the Term in Article 13 142

3.1.2 Relevance of Headings of Treaty Articles 143

3.1.3 Use of the Term in the OECD Commentary 145

3.1.4 Terms Affecting the Scope of the Article 146

3.2 Definition of Property 147

3.3 Definition of Gains 150

3.4 History of Gains Covered by Article 13 151

3.5 Other Model Conventions and Treaties 160

3.6 Preliminary Comments 164

3.7 Article 7 and Article 13: Interaction 169

3.7.1 Scope of Article 7 169

3.7.2 Article 7 and Article 13: Attribution of Taxation Rights 170

3.8 Final Remarks 173

4.Definition of Alienation 175

4.1 Independent Treaty Meaning vs.Domestic Law Definition 175

4.1.1 History of Terms Used in the Model Conventions for the Event Giving Rise to Capital Gains 176

4.1.2 OECD Commentary Position 182

4.2 Appreciation in Value of Property 185

4.2.1 Taxation of Unrealized Gains 185

4.2.2 Applicability of Article 22 187

4.2.3 Consistency of Article 7-Article 21 Treaty Regime with Article 13 Regime 188

4.2.4 Remarks 191

4.3 Change in the Use of a Capital Asset 191

4.4 Final Remarks 195

Chapter Ⅲ Gains Derived from the Alienation of Immovable Property （Article 13（1）） 197

1. OECD Model and Other Model Conventions 197

1.1 OECD Model 197

1.2 Other Model Conventions 198

2. Purpose of Article 13（l） 201

3. Geographical Scope of Article 13（1） 202

3.1 Bilateral Reach 202

3.2 Versions in 1963 OECD Model and 1977-2005 OECD Models 203

4. Cases outside the Bilateral Reach of Article 13（1） 206

4.1 Applicability of Article 13（5） 206

4.1.1 Scope 206

4.1.2 Two Relevant Factors 207

4.1.3 OECD Commentary Position 209

4.1.4 Historical Analysis 212

4.1.5 Remarks 213

4.2 Alternatives to Article 13（5） 215

4.2.1 Article 7 and Article 21 215

4.2.2 Scope and Purpose of Article 7 219

4.2.3 Scope and Purpose of Article 21 220

4.2.4 Interaction of the Two Articles 223

4.2.5 Applicability of Article 21 to Capital Gains 226

4.2.6 Remarks 227

5.Article 13（1） and Article 13（2）: Interaction 227

5.1 Situs Rule vs.Permanent Establishment Rule 227

5.2 Immovable Propetyy in Permanent Establishment State 229

5.2.1 Capital Gains 229

5.2.2 Income from Immovable Propetyy 230

5.2.3 Taxation of Capital 231

5.3 Immovable Property in Residence State 231

5.3.1 Capital Gains 232

5.3.2 Income from Immovable Property 233

5.3.3 Taxation of Capital 234

5.4 Immovable Property in a Third State 234

5.4.1 Capital Gains 235

5.4.2 Income from Immovable Property 237

5.4.3 Taxation of Capital 238

5.5 Cases: Summary 239

5.6 Situs Rule in the OECD Model 241

6. Definition of Derived 246

6.1 Domestic Law Definition vs.Autonomous Definition 246

6.2 History 247

6.2.1 ‘Derived’ in the League Model Conventions 247

6.2.2 Alternative Terms in the League Model Conventions 253

6.3 Use of ‘Derived’ in Article 13 255

6.3.1 OECD Model 255

6.3.2 From 1946 London Draft to 1977 OECD Model 257

6.4 Use of ‘Derived’ in the Other OECD Model Articles 259

6.4.1 Article 6 259

6.4.2 Article 10（5） 259

6.4.3 Article 15 260

6.4.4 Article 16 261

6.4.5 Article 17 262

6.4.6 Article 23 263

6.4.7 French Version 265

6.4.8 Remarks 266

6.5 Alternatives to ‘Derived’ in the OECD Model 266

6.5.1 Income or Gains from Something 268

6.5.2 Profits of Something Carried on by a Person 268

6.5.3 Income of a Person 270

6.5.4 Income Paid 270

6.5.5 Income Received 271

6.5.6 Income Beneficially Owned by a Person 271

6.5.7 Income Arising in a State 272

6.5.8 Income Accrued to a Person 273

6.6 Final Remarks 273

7. Definition of Immovable Property in Article 13（1） 275

7.1 Cross Reference to Article 6 275

7.1.1 Scope of Article 6（2） 275

7.1.2 History 277

7.1.3 ‘As Defined in Paragraph 2 of Article 6’ vs.‘Referred to in Article 6’ 280

7.2 Article 6（2）: Definition of Immovable Property 286

7.2.1 History 286

7.2.2 Structure 288

7.2.3 Article 6（2） and Article 3（2） 289

7.2.4 Definition of Law 291

7.2.5 Definition of Situated 298

7.2.6 Definition of Terms in Positive and Negative List 302

7.2.7 Consistency for Purposes of Applying Article 13（1） 303

7.2.8 Consistency for Purposes of Applying Article 13（5） and Article 21 304

Chapter Ⅳ Gains Derived from the Alienation of Shares in Immovable Property Companies （Article 13（4）） 307

1. OECD Model AND Other Model Conventions 307

1.1 OECD Model 307

1.2 Other Model Conventions 307

2. Indirect Alienation of Immovable Propetyy and Tax Treaties 313

2.1 Domestic Sourcing Provisions 313

2.2 Domestic Sourcing Provisions and Tax Treaties: Interaction 315

3. Inclusion of Article 13（4） in OECD Model 318

3.1 Purpose and Nature of Article 13（4） 318

3.2 Article 13（4） and the Improper Use of Tax Treaties 320

4. Geographical Scope of Article 13（4） 324

4.1 Bilateral Reach 324

4.2 Cases within the Bilateral Reach of Article 13（4） 325

4.2.1 Immovable Property Company Resident in the Situs State 325

4.2.2 Immovable Property Company Resident in the Residence State 326

4.2.3 Immovable Property Company Resident in a Third State 327

4.3 Cases Outside the Bilateral Reach of Article 13（4） 328

4.3.1 Relevant Immovable Property in the Residence State 328

4.3.2 Relevant Immovable Property in a Third State 329

5. Article 13（4） and Article 13（2）: Interaction 330

5.1 Shares of an Immovable Propetyy Company Forming Part of the Business Propetyy of a Permanent Establishment 330

5.2 Immovable Property in the Permanent Establishment State 331

5.3 Immovable Propetyy in the Residence State 333

5.4 Immovable Propetyy in a Third State 335

5.5 Inconsistency 338

5.6 Possible Solutions 340

6. Scope: Gains Derived From Alienation of Shares 341

6.1 Definition of Shares 341

6.1.1 Exclusion of Interests in Other Entities 343

6.1.2 Exclusion of Other Interests in Joint-Stock Companies 345

6.2 Alienation of Shares 347

6.2.1 Non-Substantial Shareholdings 348

6.2.2 Listed Shares 348

6.2.3 Corporate Reorganizations 350

6.2.4 Shares Held by Pension Funds 352

7. Definition of Immovable Property Company 353

7.1 Value Test 353

7.2 Definition of Immovable Property 354

7.2.1 Applicability of Article 6 Definition 354

7.2.2 Immovable Propetyy in which a Business is Carried on 357

7.3 Sources from which the Shares Derive Their Value 359

7.3.1 Relevant Propetyy 359

7.3.2 Definition of Value 363

7.4 When the Value Test Must Be Met 365

7.5 Direct or Indirect Derivation of Value 367

7.6 Indirect Derivation of Value: Multi-Tier Chains of Companies 373

7.7 Compatibility of the Value Test with the Purpose of the Provision 375

7.7.1 Application Requirements 376

7.7.2 Attribution of Taxation Rights 377

7.7.3 Proposed Solution 380

8. Obtaining Information and Collecting Taxes 381

9. Double Exemption 384

10. Effects of Introduction of Article 13（4） on the Attribution of Taxation Rights 385

10.1 Indirect Ownership Structure and Related Attribution of Taxation Rights 385

10.2 Attribution of Taxation Rights Before the Introduction of Article 13（4） 385

10.3 Attribution of Taxation Rights after the Introduction of Article 13（4） 386

10.4 Points for Further Discussion 389

11.Article 13（4） And Substantial Interest Provisions: Interaction 390

11.1 Substantial Interest Provisions 390

11.2 Interaction when Contained in the Same Treaty 392

11.3 Interaction when Contained in Different Treaties Applicable to the Same Alienation Of Shares 392

Bibliography 395