Scope and interpretation of article 12A : assessing the impact of the new fees for technical services

Abstract

One of the most important changes in the update of the UN Model of 2017, released in May 2018, is the introduction of a new Article 12A dedicated to fees for technical services. In this contribution, the authors analyse the policy considerations which underly the new provision and describe past and current tax treaty practice with regard to the allocation of taxing rights on fees for technical services. The authors examine the scope of the new model Article 12A and its interaction and potential overlap with items of income covered under Article 5 and Article 7 (permanent establishment and business profits), Article 12 (royalties) and Article 14 (independent services) of the UN Model. In the final section, the authors analyse how the new provision might play a significant role in the taxation of (certain business models of) the digital economy