Article 6: Income from Immovable Property
Learning Objectives: You should
- Know how to identify immovable property and real property
- Know when source countries can tax income from immovable property
United Nations Model Double Taxation Convention between Developed and Developing Countries (2017 Update)
Article 6 Income From Immovable Property
Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.
The term "immovable property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources; ships, boats and aircraft shall not be regarded as immovable property.
The provisions of paragraph 1 shall also apply to income derived from the direct use, letting or use in any other form of immovable property.
The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services.
OECD Model Tax Convention on Income and on Capital (2017 Update)
Article 6
Income From Immovable Property
Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.
The term "immovable property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources; ships, boats and aircraft shall not be regarded as immovable property.
The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property.
The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise.
Article 6 Bibliography
Carlo Gabarino, Judicial Interpretation of Tax Treaties: The Use of the OECD Commentary, Chapter 5 “Income from Immovable Property, Capital Gains, and Captial” <https://perma.cc/CH3X-E3JF>
Cortot-Boucher, Emmanuelle. “France: Société DGFP Zeta” in Michael Lang et al, eds, Tax Treaty Case Law Around the Globe 2015 (Vienna: Linde, 2016) 91 <https://www.ibfd.org/IBFD-Products/Tax-Treaty-Case-Law-around-Globe-2015>
Gianni, Monica. “U.S. Report” in Guglielmo Maisto, ed, Immovable Property under Domestic Law, EU Law and Tax Treaties (Amsterdam: International Bureau of Fiscal Documentation, 2015), online: <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2669686>
Maisto, Guglielmo, ed. Immovable Property under Domestic Law, EU Law and Tax Treaties (Amsterdam: International Bureau of Fiscal Documentation, 2015) <https://www.ibfd.org/IBFD-Products/Immovable-Property-under-Domestic-Law-EU-Law-and-Tax-Treaties>
Maitrot de la Motte, Alexandre. “France: Is There Symmetry between State of Taxation and State of Deduction of Expenses?” in Eric CCM Kemmeren et al, eds, Tax Treaty Case Law Around the Globe 2014 (Amsterdam: International Bureau of Fiscal Documentation, 2014) 41 <https://www.ibfd.org/IBFD-Products/Tax-Treaty-Case-Law-Around-Globe-2014>
Norregaard, John. Taxing Immovable Property: Revenue Potential and Implementation Challenges (Washington, DC: International Monetary Fund, 2013) <https://perma.cc/L42T-3J3G>
Ogutu, Andrew Harun. “The Relevance of Domestic Law of the Source State in the Interpretation of Distributive Rules Under Special Consideration of Art 6(2) and Art 10(3) of the OECD-MC” in Michael Reimer, Ekkehart. “Income from Immovable Property (Article 6 OECD Model Convention)” in Michael Lang et al, eds, Source Versus Residence: Problems Arising from the Allocation of Taxing Rights in Tax Treaty Law and Possible Alternatives (Austin: Wolters Kluwer Law & Business, 2008) 1 <https://perma.cc/HS92-GU5W>
Sanghavi, Dhruv, Income from Immovable Property — Preserving the Situs and the Permanent Establishment Principles (August 9, 2016). (2016) British Tax Review Issue 3. Available at SSRN: https://ssrn.com/abstract=2822280
Schilcher & Patrick Weninger, eds. Fundamental Issues and Practical Problems in Tax Treaty Interpretation (Vienna: Linde, 2008) <https://perma.cc/672V-7YMX>
Siu, Erika and Picciotto, Sol and Mintz, Jack and Sawyerr, Akilagpa, Unitary Taxation in the Extractive Industry Sector (May 1, 2015). ICTD Working Paper 35. Available at SSRN: https://ssrn.com/abstract=2634008 or http://dx.doi.org/10.2139/ssrn.2634008
Article 6 Cases
Botai Corporation, NV v Commissioner of Internal Revenue, 30 August 1990, (1990) 60 TCM 681 (United States).
Bundesfinanzhof (Federal Fiscal Court), I R 95/96, 17 December 1997, Bundessteuerblatt, 1998, II, 260 (Germany).
Bundesfinanzhof (Federal Fiscal Court), VIII R 134/78, 22 January 1980, Bundessteuerblatt, 1980, II, 447 (Germany).
Conseil d’État [Supreme Administrative Court], 1 October 2013, Société BNP Paribas, No 351982 (France).
Conseil d’État [Supreme Administrative Court], 12 March 2014, No 352212 (France).
Cour Administrative d’Appel Marseille (Administrative Court of Appeal of Marseille), 02-237, 3 May 2005, Droit Fiscal, 2006, 73 (France).
Cour Administrative d’Appel Paris (Administrative Court of Appeal, Paris), 94PA01904, 7 December 1995, Droit Fiscal, 1996, 13, 387 (France).
Cour d’Appel Bruxelles (Court of Appeals, Bruxelles), 1998-04-30, 30 April 1998, De Fiscale Koerier, 1998, 316 (Belgium).
Finanzgericht Bayern (Tax Court, Bayern), V 55/77, 17 December 1980, Entscheidungen der Finanzgerichte, 1981, 7, 331 (Germany).
Finanzgericht Schleswig-Holstein (Tax Court, Schleswig-Holstein), 2K 148/00, 27 November 2002, Entscheidungen der Finanzgerichte, 2003, 376 (Germany).
Gerechtshof Amsterdam (Court of Appeal, Amsterdam), 5168/87, 12 September 1990, Vakstudie-Nieuws, 1991, 2237 (Netherlands).
Gerechtshof’s Hertogenbosch (Court of Appeal, Hertogenbosch), 07/00088, 17 October 2008, Vakstudie-Nieuws, 2009, 13.14 (Netherlands).
Hof van Cassatie/Cour de Cassation (Supreme Court), F030006F, 2 December 2004, Tijdschrift voor Fiscaal Recht issue no 304 (Belgium).
Hoge Raad, 3 June 2016, no 14/05100, BNB 2016/171 (Netherlands).
Hojesteret (Supreme Court), 7/1991, 25 June 1996, Tidsskrift for Skatter of Afgifter, 1996, 532 (Denmark).
II FSK 1692/14 (Poland).
KHO 2016/2147 (71) (Finland).
KHA 2016/2146 (72) (Finland).
Rechtbank Haarlem (District Court, Haarlem), 08/5733, 1 September 2009 Vakstudie Nieuws 2010/17.10
RHH Renneberg v Staatssecretaris Van Financien(2008) (European Court of Justice).
Steuerrekursgericht Aargau (Tax Appeal Court, Aargau), RV.2003.50420/K 8341, 17 February 2005, Aargauische Gerichts-und Verwaltungsentscheide, 2005, 72, 354 (Switzerland).
Steuerrekurskommission Schwyz (Tax Appeal Commission, Schwyz), StKE 89/98, 13 June 2000, Steuerpraxis des Kantons Schwyz, 2000, 18, 128 (Switzerland).
Supreme Court, 29 Sept 2016 case No F 14 0006 F (Belgium).
Tribunal Administratif Vaud (Administrative Court, Vaud), FI 2003/0048, 9 October 2003, Steuerrevue, 2004, 6, 446 (Switzerland).