International Tax Blog

Deemed Permanent Establishment, But Not Carrying On Business

The Australian Tax Office (“ATO”) recently held that a U.S. resident head lessor had a deemed permanent establishment in Australia under Article 5, paragraph 4(b) of the Australia-U.S. Income Tax Treaty (the “Treaty”). However, because the U.S. resident was not carrying on business in Australia, Australia was precluded, under Article 7, paragraph 1 of the Treaty, from taxing the business profits of the U.S. resident. See ATO Interpretive Decision 2009/21. Permanent Establishment Article 5, paragraph... Read more →

Treaty Shopping & Anti-Treaty Shopping

“Treaty shopping” generally refers to a situation where a person, who is resident in one country (say the “home” country) and who earns income or capital gains from another country (say the “source” country), is able to benefit from a tax treaty between the source country and yet another country (say the “third” country). This situation often arises where a person is resident in the home country but the home country does not have a... Read more →