Acknowledgements Foreword v vii Part One EU Tax Law Chapter 1: Enterprise, Business and Business Profits in EU Tax Law 3 Pasquale Pistone 1.1. Introduction 3 1.2. An empirical reconstruction of the three concepts based on ECJ case law 4 1.3. A more focused analysis of undertakings in the light of State aid case law 10 1.4. Selected issues concerning secondary tax law 12 1.4.1. Directives in the field of direct taxes 12 1.4.2. VAT Directive 2006/112/EC 17 1.4.3. The capital duty directive 18 1.5. Legal instruments of EU tax coordination 19 1.6. Conclusions 20 Chapter 2: Extra-Textual References to Enterprise and Business in the European VAT Directive 23 Andrea Parolini 2.1. Introduction 23 2.2. The no-supply rule enshrined in Art. 19 of the VAT Directive 24 2.2.1. In general 24 2.2.2. The concept of totality of assets or part thereof according to the ECJ 25 2.3. Open questions 27 ix
Part Two Tax Law Chapter 3: The Meaning of Enterprise, Business and Business Profits in Domestic Tax Law 31 Luc De Broe 3.1. Introduction 31 3.2. Civil law vs common law: Main similarities and differences 32 3.3. Civil law 33 3.4. Common law 37 Chapter 4: Enterprise, Business and Business Profits : From the League of Nations to the Current OECD Model Tax Convention 41 Jacques Sasseville 4.1. Introduction 41 4.2. The 1928 models of the League of Nations 41 4.3. The 1943 Mexico Model and the 1946 London Model 42 4.4. The OEEC reports 44 4.5. The deletion of Art. 14 in the 2000 Update 50 4.6. The 2008 and 2010 Updates 51 4.7. Interpretation of the treaty concepts of enterprise, business and business profits 53 4.7.1. The concept of enterprise 53 4.7.2. The concept of Business 55 4.7.3. The Concept of Business Profits 57 Part Three Special Issues in Tax Treaty Law Chapter 5: Enterprise and Enterprise of a Contracting State : Towards a Century of Confusion Regarding the Term Enterprise in the Model Double Taxation Conventions 61 Kees van Raad 5.1. Introduction 61 5.2. Inventory and analysis of the use of the term enterprise in the 2010 OECD Model 62 x
5.2.1. Inventory 62 5.2.2. Analysis 64 5.3. The term enterprise in the League of Nations Models 65 5.3.1. Introduction 65 5.3.2. The 1925 Resolutions 65 5.3.3. The 1927 Draft Convention 67 5.3.4. The 1931 Draft Plurilateral Convention 68 5.3.5. The 1933 Draft Convention on the Allocation of Business Income 69 5.3.6. The Mexico and London Drafts 70 5.4. Evaluation of the use of the term enterprise in the League of Nations draft conventions 72 5.5. Proposal 72 Chapter 6: Business and Business Profits 85 Alexander Rust 6.1. Introduction 85 6.2. Consequences of an interpretation in the light of domestic law 86 6.3. Consequences of an interpretation taking the context into account 91 6.4. Relationship between Art. 7 and other distributive rules 93 6.4.1. The meaning of the terms dependent and independent 95 6.4.2. Distributive rules considered leges speciales to Art. 15 or to Art. 7 96 6.4.3. Distributive rules that deal with special aspects of an independent or dependent activity 97 6.4.4. Distributive rules that partially overlap with Art. 7 97 6.4.5. Final thoughts on the relationship of Art. 7 to other distributive rules 100 6.5. Consequences for the application of Art. 23A 103 6.6. Conclusions for the interpretation of the terms business and business profits 106 Chapter 7: The term Enterprise and Art. 24 of the OECD Model Convention 107 Michael Lang 7.1. Meaning of the term enterprise in Art. 24 OECD Model Convention 107 7.2. Legislative developments 108 xi
7.3. The term enterprise in the light of the objective and purpose of Art. 24 OECD Model 112 7.4. The term enterprise in the context of the Model Convention 113 7.5. Significance of domestic law? 116 7.6. Conclusion 122 Part Four Country Reports Chapter 8: Australia 127 Graeme S. Cooper 8.1. The meaning of enterprise and business in domestic non-tax law 127 8.1.1. Enterprise in domestic law 128 8.1.2. Business in domestic law 129 8.2. The meaning of enterprise, business and business profits in domestic tax law 132 8.2.1. Enterprise in domestic tax law 132 8.2.1.1. Income tax 132 8.2.1.2. Indirect taxes 132 8.2.2. Business in domestic tax law 135 8.2.2.1. Business vs expensive hobby or pastime 137 8.2.2.2. Business vs isolated profit-making transaction 139 8.2.2.3. Business vs investment 141 8.2.2.4. CFC provisions and proposals 143 8.2.3. Business profit in domestic income tax law 144 8.2.3.1. Capital gains vs revenue receipts 144 8.2.3.2. Receipts vs profits 145 8.2.3.3. Investment income as business profits 146 8.3. Comparison with the meaning of enterprise and business in EU tax law 147 8.4. Enterprise, business and profits as interpreted for the purposes of tax treaties 147 8.4.1. Australia s tax treaty practice 147 8.4.1.1. The impact of Art. 13 on business profits 148 8.4.1.2. Modern treaty practice for business profits under Art. 13 150 8.4.2. Interpretation of treaties 153 xii
8.4.2.1. The meaning of enterprise 153 8.4.2.2. Including isolated transactions as a business 154 8.4.2.3. Gains of a speculator as business profits vs profits from the alienation of property 155 8.4.2.4. Revenue gains of an ongoing business as business profits vs profits from the alienation of property 156 8.4.2.5. Capital gains of an ongoing business 158 8.4.2.6. Investment income as business profits 161 8.4.3. Enterprise and business profits from source-state perspective or the State of residence-state perspective 163 8.5. Compatibility between domestic tax law and tax treaties 164 Chapter 9: Austria 167 Elke Aumayr 9.1. The meaning of enterprise and business in domestic non-tax law 167 9.1.1. General 167 9.1.2. The meaning of enterprise in Austrian commercial law 168 9.2. The meaning of enterprise, business and business profits in domestic tax law 171 9.2.1. The meaning of enterprise in domestic tax law 171 9.2.2. The meaning of business and business profits in domestic tax law 174 9.2.3. The meaning of place of business in domestic tax law 176 9.3. The meaning of enterprise and business in EU tax law 179 9.3.1. General 179 9.3.2. Implementation of the term economic activity in Austrian VAT law 180 9.3.3. Implementation of Art. 11 of VAT Directive 2006/112/EC 182 9.4. Enterprise, business and business profits as interpreted for the purposes of tax treaties 183 9.4.1. Austria s tax treaty practice 183 xiii
9.4.1.1. General 183 9.4.1.2. Taxation of business profits 183 9.4.1.3. The definition of permanent establishment 184 9.4.1.4. Independent personal services 185 9.4.2. The interpretation of tax treaties 186 9.4.2.1. General 186 9.4.2.2. Treaty interpretation in Austria 189 9.4.3. Enterprise and business profits from the source-state perspective or the residence-state perspective 191 9.4.3.1. General 191 9.4.3.2. Austria as the state of residence 192 9.4.3.3. Austria as the state of source 192 9.5. Compatibility of Austria s domestic tax law with tax treaties and EU law 193 Chapter 10: Belgium 197 Katrien Willoqué and Ellen Cassaer 10.1. The meaning of enterprise and business in domestic non-tax law 197 10.1.1. Belgian economic law: Commercial vs non-commercial 197 10.1.2. The term enterprise in legal literature 199 10.1.3. Enterprise in Belgian economic law 200 10.1.3.1. Accounting law 200 10.1.3.2. Belgian legislation on the registration of enterprises 201 10.1.3.3. Competition law 201 10.1.3.4. Market practices and consumer protection 202 10.1.3.5. Belgian act on continuity of enterprises 202 10.1.3.6. Conclusion: There is no such thing as the enterprise in Belgian non-tax law 203 10.1.4. De lege ferenda 203 10.1.5. Business the most notable absentee in Belgian non-tax law 204 10.1.5.1. Determination of the place of business is a matter of fact 205 10.1.6. Enterprise, business and holding companies 206 10.2. The meaning of enterprise, business and business profits in domestic tax law 207 xiv
10.2.1. Enterprise, business and business profits in Belgian income tax law: Introduction 207 10.2.2. Business : A non-existent term in Belgian income tax 207 10.2.3. The terms enterprise and business profits in personal income tax 208 10.2.3.1. Carrying on an enterprise: Profits 209 10.2.3.2. Carrying on of a professional service or other professional activities of an independent character: Benefits 209 10.2.3.3. Benefits vs profits 210 10.2.4. Enterprise and business profits : Corporate income tax vs legal entities tax 210 10.2.4.1. Company in income tax law vs company in corporate law 211 10.2.4.2. Company, enterprise and business 212 10.2.4.3. Investment and holding activities 213 10.2.4.4. Non-profit organizations 214 10.2.4.5. Examples 214 10.2.4.6. Business profits 216 10.2.5. Business, enterprise and business profits in Belgian income tax 217 10.2.6. Non-resident tax and place of business 217 10.2.7. Enterprise in other kind of taxes 220 10.3. The meaning of enterprise and business in EU tax law 221 10.3.1. EU direct tax law 221 10.3.2. VAT legislation 222 10.3.2.1. The meaning of economic activity in EU tax law 222 10.3.2.2. The meaning of economic activity and enterprise in Belgian VAT law 223 10.3.2.3. VAT grouping 225 10.4. Enterprise, business and business profits as interpreted for the purposes of tax treaties 226 10.4.1. Belgium s tax treaty practice 226 10.4.1.1. Introduction 226 10.4.1.2. The concepts of enterprise, business and business profits in Belgium s tax treaties 227 10.4.2. The interpretation of tax treaties 228 10.4.2.1. Introduction 228 xv
10.4.2.2. The Vienna Convention and Art. 3(2) of the OECD Model 229 10.4.2.3. The Belgian Standard Model Draft 232 10.4.2.4. The Belgian tax administration s view point 234 10.4.2.5. Interpretation of the concepts enterprise, business and business profits 235 10.4.3. Enterprise and business profits from the source-state perspective or the residence-state perspective 237 10.5. Compatibility of domestic tax law provisions with EU law and tax treaties 240 Chapter 11: Canada 245 Kim Brooks 11.1. Function of the concept of business in Canadian tax law 245 11.2. The meaning of enterprise and business in Canadian non-tax law 248 11.3. The meaning of enterprise, business and business profits in Canadian tax law 250 11.3.1. Distinguishing non-deductible personal expenses and deductible business expenses 250 11.3.2. Distinguishing non-taxable amounts with no source from business income 255 11.3.3. Distinguishing business income from other sources of income 255 11.3.3.1. Distinguishing employment income from business income 255 11.3.3.2. Distinguishing income from property from business income 258 11.3.3.3. Distinguishing capital gains from business income 259 11.3.3.4. Business income as a measure of geographic nexus 260 11.4. Differences between income tax law and other tax legislation 263 11.5. Enterprise, business and business profits as interpreted for purposes of tax treaties 263 11.5.1. State tax treaty practice 263 11.5.1.1. Definitions 264 xvi
11.5.1.2. Permanent establishment 265 11.5.1.3. Business profits 267 11.5.1.4. Non-discrimination 270 11.6. Compatibility of Canadian tax law with Canada s tax treaties 271 Chapter 12: France 273 Nicolas Message 12.1. Introduction 273 12.2. The meaning of enterprise and business in French domestic non-tax law 273 12.2.1. The French definitions of business and enterprise 274 12.2.1.1. The commercial business (fonds de commerce) 274 12.2.1.2. The agricultural business (fonds agricole) 275 12.2.1.3. The crafts business (fonds artisanal) 276 12.2.1.4. The civil business (fonds civil or fonds d exercice libéral) 277 12.2.2. The place of businesses and enterprises under French domestic non-tax law 278 12.3. Meaning of enterprise, business and business profits in domestic tax law 280 12.3.1. The meaning of enterprise, business and business profits according to the French territoriality principle 282 12.3.2. Other considerations as regard to the meaning of enterprise, business and business profits in domestic tax law 283 12.3.2.1. The profitability criterion 283 12.3.2.2. The economical criterion: Real spot of convergence 284 12.3.2.3. Other nuances deriving from commercial taxes 285 12.3.3. Holding companies and fictitious companies 285 12.3.3.1. Holding companies and holding activities 285 12.3.3.2. Fictitious companies 286 12.4. The meaning of enterprise and business in EU tax law 287 12.4.1. EU tax law widens the borders of the domestic definitions enterprise and business 287 xvii
12.4.1.1. The ECJ Papillon case 287 12.4.1.2. Common Consolidated Tax Base 288 12.4.2. Enterprise and business in EU VAT legislation 288 12.4.2.1. Implementation of the term economic activity in French VAT 288 12.4.2.2. Definition of economical activity according to ECJ case law 289 12.4.2.3. Definition of economical activity according to French case law 290 12.4.2.4. Implementation of Art. 11 of the VAT directive 290 12.5. The meaning of enterprise, business and business profits as interpreted for the purpose of tax treaties 290 12.5.1. French tax law interpretation of a permanent establishment 291 12.5.1.1. A place of business 291 12.5.1.2. What is a fixed place of business in terms of geographical location (the location test)? 292 12.5.1.3. What is a fixed place of business in terms of the time that the place is used (the duration test)? 293 12.5.1.4. Meaning of through which the business of an enterprise is wholly or partly carried on 293 12.5.1.5. Does the place of business have to be owned or rented by the taxpayer (right of use test)? 294 12.5.1.6. Other aspects of the relationship between the place and the enterprise s business 295 12.5.1.6.1. Can the activity of owning and renting buildings source a PE? 295 12.5.1.6.2. Should a business installation be autonomous? 295 12.5.2. French interpretation of the listed examples of a permanent establishment (Art. 5(2)) 296 12.5.2.1. A place of management 297 12.5.2.2. A branch 297 xviii
12.5.2.3. An office 298 12.5.2.4. A factory or a workshop 300 12.5.2.5. A mine, an oil or gas well, a quarry or any other place of extraction of natural resources 300 12.6. Compatibility of domestic tax law provisions with tax treaties and EU law 300 Chapter 13: Germany 305 Sebastian Heinrichs 13.1. Introduction 305 13.2. The meaning of enterprise and business in domestic non-tax law 306 13.2.1. The meaning of enterprise 306 13.2.1.1. Enterprise as an object in private law 306 13.2.1.2. Enterprise as a subject in group law 307 13.2.1.3. Enterprise as a subject in competition law 309 13.2.1.4. Enterprise as an object in bankruptcy law 309 13.2.2. The meaning of business 310 13.2.2.1. Business as an object of reference in employment law 310 13.2.2.2. Business as an object of reference in commercial law 311 13.2.2.3. Business as an activity commercial law and competition law 313 13.3. The meaning of enterprise, business and business profits in domestic tax law 314 13.3.1. The meaning of business in German tax law 314 13.3.1.1. Business in German income and municipal trade tax law 314 13.3.1.1.1. Positive requirements 315 13.3.1.1.2. Extensions by case law and special regimes 317 13.3.1.1.3. Negative statutory requirements Demarcation between business, independent personal services, and agriculture and forestry 319 xix
13.3.1.1.4. Negative requirement by case law Demarcation between business and mere private investment 320 13.3.1.1.5. Legal form and business 322 13.3.1.1.6. Special modifications Trade Tax 323 13.3.1.2. Business in inheritance and gift tax law 323 13.3.1.3. Business in turnover tax law 324 13.3.1.4. Comparison with the meaning of business in domestic non-tax law 324 13.3.2. The meaning and scope of business profits in German income tax law 324 13.3.3. The place of business in German tax law 325 13.3.4. The meaning of enterprise 326 13.3.4.1. Enterprise in income tax and trade tax law 326 13.3.4.2. Turnover tax law 327 13.4. The meaning of enterprise and business in EU tax law 327 13.4.1. Implementation of the term economic activity in domestic VAT law 328 13.4.1.1. Examination of the domestic definition 328 13.4.1.2. Comparison with the enterprise definition under domestic income tax law 329 13.4.2. Art. 11 of VAT Directive 2006/112/EC (Organschaft) 26 13.5. Enterprise, business and business profits as interpreted for the purposes of tax treaties 331 13.5.1. Germany s tax treaty practice 331 13.5.1.1. The business and enterprise definitions in Art. 3 of the OECD Model 331 13.5.1.2. The fate of Art. 14 of the OECD Model after 2000 332 13.5.1.3. The treaty practice on Art. 7 of the OECD Model 333 13.5.2. The interpretation of tax treaties 333 13.5.2.1. The meaning of business and enterprise in the field of German double taxation treaties 334 xx
13.5.2.2. The meaning of business profits in the field of German double taxation treaties 337 13.5.3. Enterprise and business profits from the source-state perspective or the residence-state perspective 338 13.6. Compatibility of domestic tax law provisions with tax treaties and EU law 340 Chapter 14: Italy 341 Francesco Avella 14.1. Introduction 341 14.2. The meaning of enterprise and business in domestic non-tax law 342 14.2.1. Real and personal criteria to identify entrepreneurs 342 14.2.2. The non-tax law definition for entrepreneur 343 14.2.3. Activity of producing or trading goods or services 345 14.2.4. Proposed Italian non-tax law meaning of business 351 14.2.5. Features for a business to qualify as an enterprise : Professional, organized, economic 351 14.2.6. Enterprise vs professional services and other activities of an independent character 354 14.2.7. Examples in the Commentary on Art. 5 of the OECD Model and Italian non-tax law 356 14.2.8. Holding activities and isolated commercial transactions 360 14.3. The meaning of enterprise, business and business profits in domestic tax law 361 14.3.1. Premise 361 14.3.2. Real and personal criteria 362 14.3.3. The real criterion: Income tax law definition for enterprise 362 14.3.4. Commercial activities under income tax law 364 14.3.5. Proposed Italian tax law meaning of business 367 14.3.6. Features for a business to qualify as an enterprise: Professional and economic; limited significance of organization 368 14.3.7. Business vs professional services and other activities of an independent character 372 14.3.8. The personal criterion 374 xxi
14.3.9. Examples in the Commentary on Art. 5 of the OECD Model and Italian tax law 377 14.3.10. Holding activities and isolated commercial transactions 379 14.4. The meaning of enterprise and business in EU tax law 381 14.4.1. Enterprise and business in EU tax law 381 14.4.2. The implementation of the term economic activity in domestic VAT law 384 14.4.3. Enterprises 385 14.4.4. Self-employment activities 387 14.4.5. The implementation of Art. 11 of Directive 2006/112 388 14.5. Enterprise, business and business profits as interpreted for the purposes of tax treaties 388 14.5.1. Italy s tax treaty practice 388 14.5.2. The interpretation of Italian tax treaties 390 14.5.2.1. Enterprise, business and business profits 390 14.5.2.2. Independent professional services 396 14.5.2.3. References to the OECD Model Commentaries 396 14.5.3. Enterprise and business profits from source-state perspective or residence-state perspective 397 Chapter 15: Japan 399 Asatsuma Akiyuki 15.1. The meaning of enterprise and business in domestic non-tax law 399 15.1.1. Business and enterprise in civil law 399 15.1.2. Business and enterprise in commercial law 401 15.2. The meaning of enterprise, business and business profits in domestic tax law 402 15.2.1. The meaning of business profits 402 15.2.1.1. The meaning of business income and salary income 402 15.2.1.2. The meaning of business income and capital gain 404 15.2.1.3. The meaning of business income and miscellaneous income 406 xxii
15.2.1.4. The meaning of business income and dividend income 408 15.2.2. The meaning of business 409 15.2.2.1. Special legislation regarding companies that are deemed not to operate a business 409 15.2.2.2. The meaning of business in corporate tax law 413 15.2.2.3. The meaning of business and enterprise for all other types of taxes 415 15.3. Enterprise, business and business profits as interpreted for the purposes of tax treaties 415 15.3.1. State s tax treaty practice 415 15.3.1.1. Business profits provision as of Arts. 5 and 7 of the OECD Model 415 15.3.1.2. Individual service income provision as of Art. 14 of OECD MC 416 15.3.2. The interpretation of tax treaties 416 15.3.3. Enterprise and business profits from the source-state perspective or the residence-state perspective 416 15.3.3.1. From the source-state perspective 416 15.3.3.2. From the residence-state perspective 419 15.3.3.3. The potential impact of the OECD approach on conflicts of qualification 419 15.4. Compatibility of domestic tax law provisions with tax treaties 421 Chapter 16: Luxembourg 427 Katarina Köszeghy 16.1. Introduction 427 16.2. The meaning of enterprise and business in domestic non-tax law 428 16.2.1. The concepts of enterprise and business in Luxembourg civil law 428 16.2.2. The concept of enterprise in Luxembourg commercial law 428 16.2.2.1. No legally enshrined definition of enterprise in Luxembourg commercial law 428 16.2.2.2. The definition of enterprise in Art. 8 of the Commercial Code 429 xxiii
16.2.2.2.1. Trader as an enterprise 429 16.2.2.2.2. Commercial companies being an enterprise 431 16.2.2.2.3. Branches of non-resident companies being an enterprise 432 16.2.3. The meaning of business in Luxembourg non-tax law 432 16.2.4. The distinction between enterprise, business and independent personal services 433 16.2.5. The relation of domestic provisions to Art. 5 of the OECD Model 433 16.3. The meaning of enterprise and business in domestic tax law 435 16.3.1. The meaning of enterprise in the Luxembourg Income Tax Law (LITL) 435 16.3.1.1. The meaning of enterprise for tax-transparent entities 435 16.3.1.1.1. Income derived by an enterprise 436 16.3.1.1.2. A definition of enterprise in Art. 14(1) of the LITL 436 16.3.1.2. The meaning of enterprise for fiscally non-transparent entities 438 16.3.2. The meaning of enterprise for municipal business tax law (MBTL) purposes 439 16.3.3. The deemed enterprise concept created by Luxembourg income tax law 439 16.3.3.1. Extension of the meaning of enterprise by Art. 14(4) of the LITL (théorie de l empreinte/ Geprägetheorie) 439 16.3.3.2. Extension of the meaning of enterprise by Art. 14(2) of the LITL 441 16.3.3.3. The extension of the meaning of enterprise by the theory of tainted income 442 16.3.3.4. Extension of the meaning of enterprise by case law 442 16.3.3.5. Extension of the meaning of enterprise by subordination provisions (théorie de la subsidiarité) 443 xxiv
16.3.4. Differences between enterprise and independent personal services 443 16.3.5. The meaning of enterprise in the VAT law (VATL) of 5 August 1969 444 16.3.6. The meaning of enterprise for Luxembourg non-resident taxpayers under LITL 445 16.4. The meaning of enterprise and business in EU tax law (VAT implementation of economic activity ) 446 16.4.1. The meaning of enterprise and business derived from EU law 446 16.4.2. The implementation of economic activity in Luxembourg law 447 16.4.3. The non-implementation of Art. 11 of the VAT Directive in Luxembourg law 448 16.4.4. The meaning of undertaking for purposes of Art. 107 of the TFEU 449 16.4.5. Enterprise in LITL vs economic activity in VATL 449 16.5. Enterprise, business and business profits as interpreted for the purposes of tax treaties 450 16.5.1. Luxembourg tax treaty practice 450 16.5.1.1. Particularities of tax treaties concluded by Luxembourg 450 16.5.1.2. Art. 14 of the OECD Model in tax treaties concluded by Luxembourg 451 16.5.2. The interpretation of tax treaties in Luxembourg 452 16.5.2.1. In general on the interpretation of tax treaties in Luxembourg 452 16.5.2.2. The meaning of enterprise, business and business profits for tax treaty interpretation 454 16.5.2.2.1. The definition of enterprise and business 454 16.5.2.2.2. The definition of business profits 456 16.5.3. Enterprise and business profits from the source-state perspective or the residence-state perspective 458 16.6. Compatibility of domestic tax law provisions with tax treaties and EU law 458 xxv
Chapter 17: Netherlands 459 Anna Gunn 17.1. Introduction 459 17.2. The meaning of the terms enterprise and business in Dutch non-tax law 462 17.2.1. Use of the terms enterprise, business and profession 462 17.2.2. Use and meaning of the term enterprise in the Workers Council Act 465 17.2.3. Use and meaning of the term enterprise in the Trade Register Act 466 17.2.4. Use and meaning of the term enterprise for the protection of employees rights 468 17.2.5. Use of the term business in the Bankruptcy Act 470 17.2.6. Distinction between entrepreneurial and investment activities 470 17.2.7. Would the examples under OECD Commentary to Art. 5 constitute a place of business in Dutch non-tax law? 471 17.3. The meaning of enterprise and business profits in Dutch direct tax law 472 17.3.1. Individual Income Taxation Act 2001 (IITA) 472 17.3.1.1. Overview of the system of the IITA 2001 472 17.3.1.1.1. Box 1: Taxable income from work and home ownership 473 17.3.1.1.2. Box 2: Taxable income from a substantial shareholding 474 17.3.1.1.3. Box 3: Taxable income from savings and investments 474 17.3.1.2. Meaning of the term business profits (Art. 3.2 IITA) 475 17.3.1.3. Meaning of the term entrepreneur (Art. 3.4 IITA) 476 17.3.1.4. Use of the hours-criterion (Art. 3.6 IITA) 476 17.3.1.5. Meaning of the term enterprise 477 17.3.1.5.1. Business profits vs wage income 478 17.3.1.5.2. Business profits vs income from other activities 478 17.3.1.5.3. Business profits vs investment income 479 xxvi
17.3.1.6. Distinction between the concepts of an objective enterprise and a subjective enterprise in Dutch tax doctrine 480 17.3.1.7. Treatment of professional activities (Art. 3.5 IITA) 480 17.3.1.8. Points taken into account by the Dutch tax authorities when assessing the status as entrepreneur 481 17.3.2. Corporate Income Taxation Act 1969 (CITA) 482 17.3.2.1. Unlimited tax liability (use of the formal enterprise concept under Art. 2(5) CITA) 482 17.3.2.2. Limited tax liability (use of the concept of a material enterprise ) 482 17.3.3. Use and meaning of the term enterprise for Dutch non-resident taxpayers 483 17.3.4. Distinction between entrepreneurial activities and investment activities 486 17.3.5. Use and meaning of the term enterprise in other provisions under CITA 487 17.3.6. Would the examples under OECD Commentary to Art. 5 constitute an enterprise in Dutch tax law? 488 17.4. The meaning of enterprise and business in EU law 489 17.4.1. The Dutch VAT Act (Council Directive 2006/112/EC) 489 17.4.1.1. Use of the term entrepreneur in the VAT Act 489 17.4.1.2. Use of the concept of an economic activity in Dutch case law 491 17.4.1.3. The VAT fiscal unity (Art. 7(4) VAT Act) 492 17.4.2. Use of the term enterprise in the Competition Act 494 17.4.3. Some differences between the term economic activity and the concept of an objective/material enterprise in Dutch direct tax law 496 17.5. The meaning of the terms enterprise and business profits in Dutch tax treaties 496 17.5.1. The Netherlands tax treaty practice 497 17.5.1.1. Dutch treaty policy on the term profit as formulated in the 1998 Nota on international fiscal policy 497 17.5.1.2. Meaning of the term enterprise in the tax treaty with Germany 498 xxvii
17.5.1.3. Meaning of the term enterprise in the tax treaty with Switzerland 499 17.5.1.4. Inclusion of Art. 14 (Independent Personal Services) in Dutch tax treaties concluded after 2000 499 17.5.1.5. Use of the term enterprise in the unilateral Decree for the Prevention of Double Taxation 500 17.5.2. The interpretation of tax treaties 501 17.5.2.1. Significance of the OECD Commentary for tax treaty interpretation in the Netherlands 501 17.5.2.2. OECD Commentary on the terms enterprise, business and business profits 502 17.5.2.3. Use of the mutual agreement procedure for the interpretation of the terms enterprise and business profits 504 17.5.3. Enterprise and business profits from the source-state or residence-state perspective 505 17.5.3.1. The Dutch interpretation of the terms enterprise and business profits where the Netherlands is source state 505 17.5.3.2. The Dutch interpretation of the terms enterprise and business profits where the Netherlands is resident state 506 17.5.3.3. The observation made by the Netherlands to the OECD Commentary to Art. 23A/B 507 17.5.3.4. Alternative approaches adopted by the Netherlands towards conflicts if qualification 509 17.6. Compatibility of provisions of Dutch domestic direct tax law with international law 509 17.6.1. Compatibility with tax treaties 509 17.6.2. Compatibility with EU Law 510 17.6.3. Compatibility with international public law 512 xxviii
Chapter 18: United Kingdom 515 Rachael Arning 18.1. The meaning of enterprise and business in domestic non-tax law 515 18.1.1. The meaning of business 515 18.1.1.1. Consumer protection law 516 18.1.1.2. Commercial law 517 18.1.1.3. Company law 518 18.1.1.4. Insolvency 519 18.1.1.5. Professional services 521 18.1.1.6. Passive holding of investments 522 18.1.1.7. Frequency of transactions 524 18.1.2. The meaning of the word enterprise 524 18.1.3. Comparison of the concept of a fixed place of business and professional services in UK domestic non-tax law with the examples in the Commentary to Art.5 OECD MC 525 18.1.3.1. Fixed place of business in UK domestic non-tax law 525 18.1.3.2. Comparison of the concept of a fixed place of business and professional services in UK domestic non-tax law with the examples in the Commentary to Art.5 OECD MC 526 18.2. The meaning of enterprise business and business profits in domestic tax law 527 18.2.1. The meaning of business 527 18.2.1.1. Meaning of trade 530 18.2.1.2. Meaning of profession or vocation 532 18.2.1.3. Isolated transactions 532 18.2.2. Meaning of business profits 533 18.2.3. Holding activities 533 18.2.3.1. Companies 533 18.2.3.2. Partnerships 535 18.2.3.3. Individuals 536 18.2.4. Definition of trade in the context of exemptions and reliefs 536 18.2.4.1. Capital gains 536 18.2.4.1.1. Capital allowances 536 18.2.4.1.2. Incorporation relief and rollover relief 537 xxix
18.2.4.1.3. Entrepreneurs relief 538 18.2.4.1.4. Substantial shareholding exemption 538 18.2.4.2. Savings 539 18.2.4.2.1. Venture Capital Trusts, Enterprise Investment Scheme and Corporate Venturing Scheme 539 18.2.4.3. Inheritance tax 540 18.2.5. Fixed place of business in UK domestic tax law 541 18.2.5.1. Corporation tax 541 18.2.5.1.1. Controlled foreign company (CFC) regime: The exempt activities test 542 18.2.6. Comparison of the concept of a fixed place of business and professional services in domestic tax law with the examples in the Commentary to Art.5 OECD MC 544 18.2.7. The meaning of enterprise 544 18.3. The meaning of enterprise and business in EU tax law 545 18.3.1. The meaning of enterprise 546 18.3.2. Meaning of business 546 18.3.2.1. Direct taxes 546 18.3.2.2. Indirect tax 548 18.3.2.3. Holding activities 551 18.3.2.4. Art. 11 VAT Directive 2006/112/EC 552 18.3.2.5. Anti-avoidance 553 18.4. Enterprise, business and business profits as interpreted for the purposes of tax treaties 555 18.4.1. State s tax treaty practice 555 18.4.1.1. Treaty practice in relation to the terms enterprise, business and business profits 555 18.4.1.2. Fixed place of business 556 18.4.1.3. Independent personal services 559 18.4.2. The interpretation of tax treaties 560 18.4.2.1. Meaning of business 560 18.4.2.2. Meaning of enterprise 561 18.4.2.3. Meaning of business profits 563 18.4.2.4. Meaning of fixed place of business in the PE article 565 18.4.2.5. Mutual agreement procedure (MAP) 567 xxx
18.4.3. Enterprise and business profits from the source-state perspective or the residence-state perspective 567 18.4.3.1. Enterprise 567 18.4.3.2. Business profits 568 18.5. Compatibility of UK domestic tax law provisions with tax treaties and EU law 569 18.5.1. Compatibility of UK domestic tax law provisions with tax treaties 569 18.5.1.1. Treaty override Legislative 569 18.5.1.2. Treaty override Judicial 571 18.5.2. Compatibility of UK domestic tax law provisions with EU Law 572 18.5.2.1. Controlled foreign company rules 572 18.5.2.2. VAT grouping rules 573 Chapter 19: United States 575 Allison Christians and Yariv Brauner 19.1. The meaning of enterprise and business in domestic non-tax law 575 19.1.1. Corporate law 575 19.1.2. The Uniform Commercial Code 579 19.1.3. Bankruptcy law 580 19.1.4. Place of business in connection with the examples in Commentary to Art. 5 of the OECD Model 581 19.2. The meaning of business, enterprise and business profits in domestic tax law 584 19.2.1. Business 584 19.2.1.1. Domestic law definition 584 19.2.1.2. Modifications in the case of foreign persons 587 19.2.1.2.1. Presence requirement 587 19.2.1.2.2. Ownership of assets 588 19.2.1.2.3. Treatment of services 589 19.2.1.2.4. Attribution from other taxpayers 589 19.2.2. Business entities 590 19.2.3. Business profits 591 19.3. Enterprise, business and business profits as interpreted for the purpose of tax treaties 594 xxxi
19.3.1. State s tax treaty practice 594 19.3.1.1. United States Model Tax Convention 594 19.3.1.1.1. Definition of enterprise 594 19.3.1.1.2. Definitions of business and business profits 595 19.3.1.2. Use of terms in treaties in force 595 19.3.1.3. Art. 14 Independent personal services 600 19.3.2. The interpretation of tax treaties 601 19.3.2.1. Definition of enterprise 601 19.3.2.1.1. Definition of business 602 19.3.2.1.2. Definition of business profits 603 19.3.3. Enterprise and business profits from the source-state perspective or the residencestate perspective 604 19.4. Compatibility of domestic law provisions with tax treaties 606 19.4.1. General 606 19.4.2. Relevant relationship between treaties and the Code 607 Part Five Round-Table Discussion Chapter 20: Round Table: On the Desirability to Change the OECD Model Convention and its Commentaries 611 20.1. The practical issues and questions 611 20.2. Conclusions 635 Contributors 639 xxxii