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Update on BEPS Action 7

Luxembourg

The main purpose of the PE concept is to determine whether a contracting state has the right to tax the profits of an enterprise that is resident in the other contracting state. Taxand Luxembourg provides a critical overview of the proposals.

From the very beginning, the term PE has been at the heart of the discussions on the attribution of taxation rights in tax treaties. However, there has always been a general tendency to narrow the scope of the PE concept, which can be easily explained with the balanced import and export activities of OECD member countries.

Action 7 of the BEPS (Base Erosion and Profit Shifting) Action Plan calls for developing changes to the PE concept in the OECD model convention in order to prevent perceived abuses of the threshold that needs to be exceeded for a PE to exist.

Discover more: Update on BEPS action 7


Your Taxand contacts for further queries are:
Keith O'Donnell
T. +352 26 940 257
E. keith.odonnell@atoz.lu

Oliver Hoor
T. 
+352 26 940 646
E. oliver.hoor@atoz.lu

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Taxand's Take

Businesses need legal certainty about the threshold that gives rise to the constitution of a PE as the existence of a PE entails tax consequences and compliance obligations.

Taxand's Take Author

Keith O'Donnell
Taxand Board member & Taxand global real estate tax service line leader
Luxembourg

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