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Source jurisdiction and resident jurisdiction Appunti scolastici Premium

Appunti di International tax law su Difference between wordwide taxation and source taxation. Fornal adn economic criteria to define residence: art. 4 OECD Model Convenction. Difference between international double taxation and economic double taxation.

Esame di International tax law docente Prof. E. Cacciapuoti



Defining residence:


1. Formal criteria (registration in the registry of resident population; citizenship).

2. Mechanical test (days of presence test):

A. 183 day test (6 months).

B. Cumulative presence test considering a certain numbers of years-

3. Fact and circumstances test.

The formal criteria is sufficient and there are factors which are usually considered relevant

in determining residence of an individual:

1. Maintenance of a dwelling or an abode that is available for the taxpayer’s use;

2. Place where the individual engages in income-producing activities.

3. Location of the individual’s family.

4. Social ties to the country.

Luciano Pavarotti give up his formal criteria (ha mollato) put his registration in registro

degli italians which are residence in outside, but his social ties were in Italy: he had lover in

italy, house in italy that he utilized. So he couldn’t pretend to have residence just in

Montecarlo, because he had social ties in italy.

The substance prevales.

Often we have a conflit, when a person has the residence in two different plase for


The residence of a corporation is generally determined by reference to:

1. Formal criteria: place of corporation, legal seat (non necessary you carry out your

business here), registration in the commercial register.

2. Economic criteria: place of management (sede di direzione), principal business location,

residence of the shareholders (rarely).

I want to incorporate company because i want to carry out the business activity. Business

produces income.

If you in doing business have a strong object link in a place, you have to pay tax in that

place. Caso apple: obbiettivo criterio.

The place of incorporation test provides simplicity and certainty to the government anda

the taxpayer. Indeed, in general, a croporation cannot freely change its place of

incorporation whitout triggering a tax on the accrued gains in respect of its properties.

The place of management usually conincides with the place where the board of directors

meets and exercise control over the affairs of the corporation (it’s only one the place of

effective management but lots of place of management).

The place of management test is less certain in its application. Such test is easily exploited

for tax aoidance reasons because a che nce in the place of management generally can be

accomplished without triggering (innescando) any tax.


Para 1: main rule concerning resident persons.

Any person who is liable to world wide income taxation under the laws of the contracting

state by reason of his domicile, residence, place of management or any other criterion of a

similar nature.

There is a conflict between the same persone that is taxed twice. The double taxation la

chiede: means one persone is taxed twice or more. There is a giuridical double taxation

and economic double taxation.

Giuridical double tax: The same person is taxed twice on the same incomes.

Economic double tax: the same income is tassed in two different persons. La quota della

società divisa poi per il socio.

If there is a conflict with formal criteria for example, I have to look at the place where I

have my interest. If there are lots of problems i look at the citizen.

Oecd is an organizations who has members that has most jurisdition in the world. They

look at their model and review to facilitate agreement. Oecd model convention is not a law.

Oecd don’t change treaties, if you want to change treaties you have to renegoziate.

Leggere: Art. 4 of the modern conventions, the commentary of art. 4


International double taxation:

1. Legal international double taxation: the imposition of comparable income taxes by

two or more sovereign countries on the same item of income, of the same taxable


2. Economic international double taxation: double taxation occurs whenever there is

multiple taxation of the same items of economic income.

We have to identify 3 points: Subject, identification of tax base and territoriality.

When he asks us about residence, we have to say Wordwide principle and source

principle. Link object and subject. formal and mechanic.

Also if you aren’t registered in a state but you have in that country something, for example

house. you can be tax.

Fine riassunto.

Exemption method:

Under the exemption method, the country of residence taxes its residents on their

domestic source income and exempts them from domestic tax on their foreign-source

income. As a result, jurisdiction to tax rests exclusively with the country of source.

Credit method:

Under the credit method, foreign taxes paid by a resident taxpayer on foreign- source

income generally reduce domestic taxes payable by the amount of the foreign tax.

No refund of excess tax credit (ordinary tax credit).

What is better? -----

Exemption and credit: They are based on resident base.

I am a tax payers, it’s better credit method o exemption method: i dont’ prefer

methodology, it depends on the tax rate (50%).




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Corso di laurea: Corso di laurea magistrale in giurisprudenza
A.A.: 2017-2018

I contenuti di questa pagina costituiscono rielaborazioni personali del Publisher Verdefoglia di informazioni apprese con la frequenza delle lezioni di International tax law e studio autonomo di eventuali libri di riferimento in preparazione dell'esame finale o della tesi. Non devono intendersi come materiale ufficiale dell'università Carlo Cattaneo - Liuc o del prof Cacciapuoti Emilio.

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