چکیده:
The multinational Enterprises resort to establishing subsidiaries in states other than their residence in most cases in order to avoid PE status. Due to the assumption of independent legal entity, subsidiaries are taxed as resident taxpayers in the place of incorporation or effective management in most states. But the high level of dependence on foreign companies has caused jurisprudence in some countries, treat subsidiaries as PE of non-resident companies under article 5 of OECD Model Treaty. Considering subsidiary as PE requires fulfillment of some conditions and this article has tried to extract applicable criteria in this respect through looking at model treaty which has been the role model for drafting Iran tax treaties. Thus it’s needed to pay attention to the substantive contractual relations between parent company and subsidiary, existing circumstances on degree of dependence among them and scope of accepted entrepreneurial risk of commercial activities in context of agency contract.
خلاصه ماشینی:
However, the high level of dependence on the foreign company has caused the judicial practice of some countries to treat subsidiary companies as a permanent establishment of a non-resident company under the conditions of Article 5 of the OECD Model Tax Convention 3.
In fact, pursuant to the first paragraph of Article 7 of the OECD Model Tax Convention, the profit of a company from a contracting state is only subject to taxation by the other contracting state if it carries on business in the latter through a "Permanent Establishment" of it being resident there4; in this case, it is only subject to tax regarding the profit ِ that can be attributed to that "Permanent Establishment", taking into account the conditions stipulated in the treaty.
ِ In line with these concerns of multinational companies, paragraph seven of Article five of the OECD Model Tax Convention and general bilateral tax treaties have stipulated that a non-resident company shall not be considered to have a "Permanent Establishment" in a contracting state solely by virtue of controlling a resident company in that state.
(OECD, 2010: 181, para 1) 4- Review of judicial practice in recent years The Zimmer case3 One of the cases raised in the field of international tax law regarding the status of a subsidiary company as a permanent establishment is a case that was heard in 2010 in the "French Supreme Administrative Court"4.
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