Income Tax Treaty Practice for Tax Counsel: Planning and Structuring Transactions to Maximize Treaty-Based Benefits

Understanding and Applying Key Tax Treaty Provisions and the Coming Changes

Recording of a 90-minute CLE/CPE webinar with Q&A


Conducted on Wednesday, April 26, 2017

Recorded event now available

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Program Materials

This CLE/CPE webinar will provide tax counsel with a solid overview and explanation of key tax treaty provisions that tax counsel must master in structuring cross-border ownership structures and transactions. The panel will focus on individual, small business, and middle-market positions and will enable tax counsel to advise clients in availing themselves of treaty-based positions.

Description

The United States has in force income tax treaties with over 60 countries. The treaties are intended to eliminate or reduce double income taxation. Benefits are available to non-U.S. enterprises and nonresident aliens (and, to a limited extent, to U.S. citizens living abroad) with respect to U.S. federal income taxes and to U.S. enterprises, citizens, and residents with respect to foreign country income taxes. Tax advisers working with nonresident aliens or non-U.S. enterprises with U.S. investments or business activities and U.S. individuals and enterprises with foreign source income need to know who is eligible for treaty benefits and the procedures for claiming and reporting treaty-based tax benefits.

While each income tax treaty has its own specific terms and requirements, common themes and terminology are found in all U.S. income tax treaties. For example, under most income tax treaties, U.S. taxpayers may claim exemption from source country taxation for personal services income. Other provisions include reduction or exemption of withholding taxes on interest and dividends, and royalties.

A critical component of both inbound and outbound multinational transactions is determining what treaty benefits and limitations apply. Tax counsel serving clients subject to multiple tax jurisdictions must be able to evaluate the impact of tax treaties to ensure clients take advantage of tax benefits.

The new 2016 Model Tax Treaty announced by Treasury, which serves as the baseline text the U.S. uses to negotiate and update tax conventions, includes several key provisions that may serve to limit or deny treaty benefits for income subject to preferential foreign tax regimes. Similarly, the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (sometimes referred to as the “Multilateral Instrument” or “MLI”) released by the OECD on November 24, 2016 will enable participating countries to rapidly implement changes to certain key terms of their tax treaties without the need to renegotiate the terms of each treaty. The MLI is intended to facilitate the implementation of treaty-related measures arising from the G20/OECD BEPS project. Tax attorneys involved in cross-border transactions need to understand these latest developments and coming changes to avoid costly tax consequences.

Listen as our experienced panel explains critical tax treaty provisions that tax counsel need to know in drafting and negotiating cross-border ownership structures and transactions for individual, small business, and middle-market clients.

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Outline

  1. Purpose of income tax treaties and basic principles
  2. Conditions to benefits under U.S. income tax treaties (residence, limitations on benefits, anti-abuse rules)
  3. Treatment of personal services income
  4. Permanent establishment
  5. Taxation of dividends, interest, and royalties
  6. Recent developments (2016 U.S. Model, BEPS action items, MLI)

Benefits

The panel will review these and other key issues:

  • Purposes of income tax treaties
  • Persons who can claim benefits
  • Common residency provisions; tie breakers for dual residents
  • Savings clauses applicable to U.S. citizens
  • Limitations on benefits
  • Exemptions for personal services income
  • Permanent establishment (basic principles and proposed changes under BEPS)
  • Treatment of interest and dividends, and royalties
  • Recent developments (2016 U.S. Model, BEPS proposals and Impact of the MLI on tax treaties)

Faculty

Bryan H. Kelly
Bryan H. Kelly

Counsel
Venable

Mr. Kelly has private practice and Big Four accounting firm experience advising clients on a multitude of tax matters,...  |  Read More

Javier Salinas, JD, MBA, LLM
Javier Salinas, JD, MBA, LLM

Managing Director, International Tax
BPM

Mr. Salinas focuses his practice on tax, including international tax. His international tax expertise includes, IP...  |  Read More

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