Double Taxation Agreement Articles
Some 3,000 DTAs are currently in service worldwide. The use of DTAS to promote global trade is a central policy of the Organisation for Economic Co-operation and Development (OECD): by eliminating the risk of double taxation, the OECD can help promote the free movement of capital, goods and people and ultimately improve the functioning of free and open markets. Contact HM Revenue and Customs (HMRC) or get business tax help if you are unsure or need help with double taxation relief. HMRC has instructions for applying for double taxation relief if you are a double resident. Each contract consists of a series of articles detailing the handling of certain issues, so that the standard contract contains a commentary on the articles. This commentary is a guide that has two general objectives: 1.) to provide tax authorities with an overview of the interpretation of the text of the standard contract; and 2.) Indicate the areas in which two States are flexible in negotiating a new or revised agreement. (The current OECD commentary is a useful reference work that can be purchased from the OECD website.) The amount of your facility depends on the UK`s “double taxation treaty” with the country where your income comes from. A possible exemption in the country visited is normally provided for in Article 15(2). As a rule, they always benefit from relief, even if there is no agreement, unless the foreign tax does not correspond to UK income tax or capital gains tax. You cannot benefit from this facility if the UK Double Taxation Convention requires you to recover taxes in the country where your income comes from.
Finally, the last paragraph of Article 15 generally provides for a limited exception to the employment of seafarers. What it usually makes clear is that the tax country is from where the ship they are working on is managed efficiently – not from where it travels. Similar remuneration terms are interpreted as covering the greatest possible coverage of all income from social exclusion and covering elements such as benefits in kind and unauthorized share option gains. You usually pay taxes in the country where you reside and you are exempt from tax in the country where you get the capital gain. As a rule, they do not have to claim. In order to promote the development and use of DTAS, the OECD is making available a model contract that will be used by nations as a model for the opening of negotiations. This is why many contracts have a resemblance; OecD members are required to use the model if they want to negotiate a contract. A simple rule of thumb is that if a person works in a country and earns a daily wage, that country`s tax on that payment may be due.
In theory, even the business traveler, who is only present for one day in the country visited, could have to pay local taxes on the daily wage. but such an approach could be a major obstacle to global trade….