March 31, 2016

2016 Model Treaty – B.E.P.S. and Expatriated Entities

March 31, 2016/ Ruchelman P.L.L.C.

On February 17, 2016, the Treasury Department released its 2016 Model Treaty. The model serves as the baseline from which the U.S. initiates treaty negotiations. Various provisions are discussed in detail in this month’s Insights.

The 2016 Model Treaty adopts certain B.E.P.S. provisions, including those that eliminate double non-taxation through a splintered operation which divides a long-term project among several related parties and each party maintains the project for a limited time. That type of planning no longer works. Other B.E.P.S.-related revisions are missing. Sheryl Shah and Elizabeth V. Zanet explain what is out and what is in. They also address the way payments from expatriated entities are treated. It is not all bad news.

March 31, 2016

2016 Model Treaty – Mandatory Arbitration

March 31, 2016/ Ruchelman P.L.L.C.

Taking a cue from the U.S.-Canada Income Tax Treaty, the 2016 Model Treaty provides for mandatory arbitration as part of the article on Mutual Agreement Procedure. I.R.S. statistics indicate that under the Canadian treaty 80% of cases were resolved by the competent authorities in lieu of risking an adverse decision through arbitration. Kenneth Lobo explains the revised provision and places it in context.