A double taxation treaty is a bilateral agreement between states that keeps the same income from being taxed in two countries at once. It sets out which country holds the taxing right, how withholding rates are capped and how the credit mechanism works.
The application met most often in e-export concerns withholding rates on service fees received from abroad and on payments made abroad. To benefit from a treaty provision, a certificate of residence has to be obtained from the counterparty; without it, the full rate under domestic legislation applies. Whether a permanent establishment is created is a separate threshold: keeping a warehouse, staff or a fixed place abroad can shift the taxing right to that country. Decisions about 3PL use and offices therefore have to be assessed from a tax angle as well.
The application met most often in e-export concerns withholding rates on service fees received from abroad and on payments made abroad. To benefit from a treaty provision, a certificate of residence has to be obtained from the counterparty; without it, the full rate under domestic legislation applies. Whether a permanent establishment is created is a separate threshold: keeping a warehouse, staff or a fixed place abroad can shift the taxing right to that country. Decisions about 3PL use and offices therefore have to be assessed from a tax angle as well.
The application met most often in e-export concerns withholding rates on service fees received from abroad and on payments made abroad. To benefit from a treaty provision, a certificate of residence has to be obtained from the counterparty; without it, the full rate under domestic legislation applies. Whether a permane…
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