'Article 17(3) for Artistes and Sportsmen: Much More than an Exception'
Intertax, April 2012- Dr. D. Molenaar & Dr. H. Grams
Most states in the world apply Article 17 of the OECD Model Convention for the taxation of nonresident artistes and sportsmen, granting the taxing right to the state of performance. But inadequacies were discovered and therefore the Commentary on Article 17 introduced in 1977 the option to exclude cultural exchange and subsidized artistes and sportsmen from Article 17 in an extra Article 17(3) clause.
The authors have done research on the use of Article 17(3) and found to their surprise that on average 66% of the bilateral tax treaties contain this exception, granting the taxing right to the residence state. The question of unequal treatment between subsidized and non-subsidized commercial theatre groups and orchestras arises, which might lead to the conclusion that an Article 17(3) clause in a bilateral tax treaty between EC member States does not correspond with the freedom and nondiscrimination principles of the EC Treaty.
Where Article 17(3) takes away the risk of excessive or even double taxation, the authors support the idea that non-subsidized could also make use of the provision.
Intertax, April 2012- Dr. D. Molenaar & Dr. H. Grams
Most states in the world apply Article 17 of the OECD Model Convention for the taxation of nonresident artistes and sportsmen, granting the taxing right to the state of performance. But inadequacies were discovered and therefore the Commentary on Article 17 introduced in 1977 the option to exclude cultural exchange and subsidized artistes and sportsmen from Article 17 in an extra Article 17(3) clause.
The authors have done research on the use of Article 17(3) and found to their surprise that on average 66% of the bilateral tax treaties contain this exception, granting the taxing right to the residence state. The question of unequal treatment between subsidized and non-subsidized commercial theatre groups and orchestras arises, which might lead to the conclusion that an Article 17(3) clause in a bilateral tax treaty between EC member States does not correspond with the freedom and nondiscrimination principles of the EC Treaty.
Where Article 17(3) takes away the risk of excessive or even double taxation, the authors support the idea that non-subsidized could also make use of the provision.
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