Article 8: Shipping, Inland Waterways Transport and Air Transport
United Nations Model Double Taxation Convention between Developed and Developing Countries (2017 Update)
Article 8
International Shipping and Air Transport
Article 8 (Alternative A)
Profits of an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State.
The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.
Article 8 (Alternative B)
Profits of an enterprise of a Contracting State from the operation of aircraft in international traffic shall be taxable only in that State.
Profits of an enterprise of a Contracting State from the operation of ships in international traffic shall be taxable only in that State unless the shipping activities arising from such operation in the other Contracting State are more than casual. If such activities are more than casual, such profits may be taxed in that other State. The profits to be taxed in that other State shall be determined on the basis of an appropriate allocation of the overall net profits derived by the enterprise from its shipping operations. The tax computed in accordance with such allocation shall then be reduced by ___ per cent. (The percentage is to be established through bilateral negotiations.)
The provisions of paragraphs 1 and 2 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.
OECD Model Tax Convention on Income and on Capital (2017 Update)
Article 8 International Shipping and Air Transport
Profits of an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that state.
The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.
Article 8 Bibliography
Amar Mehta, "Taxation of Shipping Income under Tax Treaties – Development of Case Law in India" (2015) Asia-Pacific Tax Bulletin, (Volume 21), No. 3 https://perma.cc/FK8B-UW3V
Guglielmo Maisto, Taxation of Shipping and Air Transport in Domestic Law, EU Law and Tax Treaties Chapter 5, “Historical Background of Proposed Changes to Articles 8 and 15(3) OECD Model” <https://perma.cc/V26M-84Z4>
Litwińczuk, Hannah. “Poland: Judgment of the Supreme Administrative Court of 24 July 2012 (II FSK 2487/11)”in Michael Lang et al, eds, Tax Treaty Case Law Around the Globe 2013 (Vienna: Linde, 2014) 229 <https://www.ibfd.org/IBFD-Products/Tax-Treaty-Case-Law-Around-Globe-2013>
Maisto, Guglielmo. “Shipping, Inland Waterways Transport and Air Transport (Article 8 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) 21 <https://www.researchgate.net/publication/296848993_Shipping_inland_waterways_transport_and_air_transport_article_8_OECD_model_convention>
Maisto, Guglielmo. “The History of Article 8 of the OECD Model Treaty on Taxation of Shipping and Air Transport” (2003) 31:6/7 Intertax 232 <https://perma.cc/RBL5-LS9C>
Organisation for Economic Co-operation and Development. “Proposed Changes to the OECD Model Tax Convention Dealing with the Operation of Ships and Aircraft in International Traffic: Public Discussion Draft” (2013-2014), online: <https://perma.cc/5XSZ-UBYG>
Article 8 Cases
Bundesfinanzhof (Federal Fiscal Court), I B 40/94, 14 September 1994, Bundesfinanzhof/NV, 1995, 376.
Company name not disclosed v Commissioner for Inland Revenue, 25 May 1990, 53 SATC 342(T) (South Africa).
Conseil d’Etat (Supreme Administrative Court), 249801, 15 July 2004, Revue de jurisprudence fiscal, 11/2004, 1089 (France).
Conseil d’Etat (Supreme Administrative Court), 2979933, 31 July 2009, Droit fiscal, 2009, 580 (France).
Constitutional Court (CC), 18 June 2015, South African Reserve Bank and Another v Shuttleworth and Another, (CCT194/14, CCT199/14) (2015) ZACC 17 (South Africa).
Corte Suprema di Cassazione (Supreme Court), 7609, 1 September 1994 (Italy).
Finanzgericht Berlin-Brandenburg (Tax Court Berlin-Brandenburg), 8 K 8084/97, 17 January 2000, Internationales Steuerrecht, 2000, 688 (Germany).
Finanzgericht Nordrdhein-Westfalen (Tax Court, Nordrhein-Westfalen), 2 K 92/99, 22 June 2001, Enscheidungen der Finanzgerichte, 2001, 1332 (Germany).
Furness, Withy & Company Limited v. Minister of National Revenue, [1968] S.C.R. 221
Gulfmark Offshore NS Ltd v Canada, 2007 FCA 302.
Hoge Raad der Nederlanden (The Netherlands Supreme Court), 35.769, 20 December 2000, Beslissingen in Belastingzaken, 2001, 87 (Netherlands).
Hoge Raad der Nederlanden (The Netherlands Supreme Court), No AWB 10/00157, 25 March 2011, Beslissingen in Belastingzaken, 2011/179 mn PHJ Essers (Netherlands).
James Mackintosh & Co v Assistant Commissioner of Income Tax,[2005] 93 ITD 466 Mum (India).
Naczelny Sad Administracyjny (Supreme Administrative Court), II FSK 2486/11, 24 July 2012 (Poland).
Qantas Airways Ltd v United States (Internal Revenue Service), 4 April 1997, 97-1 USTC (CCH) 50,34479 (United States).
Supreme Administrative Court, 24 July 2012, No II FSK 2487/11 (Poland).
Undisclosed v The Commissioner, 34 May 1964, 26 SATC 226(F) (Zimbabwe).
Verwaltungsgerichtshof (Supreme Administrative Court), 2005/15/0072, 19 March 2008 (Austria).