Volume 47 (2019) / Issue 1

Stefan Schwibinger, 'Developing a Uniform Understanding of Income Classification: Everyone’s Business? – A Review of Business Income and the Criterion of Asset Management in Tax Treaty Interpretation' (2019) 47 Intertax, Issue 1, pp. 7–23


Conflicts of qualification under tax treaties may result from the lack of a clear borderline between business income and investment income, with potential remedies existing to resolve this problem. To analyse the problem, this article first highlights the general roots of the distinction between different income categories and then specifically addresses the categories of business income and investment income by initially outlining their general characteristics and then reviewing their different understanding in a tax treaty context for selected countries. The issue is especially relevant for borderline cases, in which specific and unique case law has developed in each jurisdiction with respect to asset management that may cause conflicts of classification in cases where a tax treaty is applied. The article then introduces and evaluates two approaches that aim to resolve conflicts of classification, namely the principle of common interpretation and the new approach to Article 23A/B OECD-MC, with regard to their applicability in the field of income classification. The approaches are then applied to case studies, followed by a discussion of the results and potential limitations.

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ISSN: 0165-2826
ID: TAXI2019002