publication . Article . 2012

Red Card Article 17?

Molenaar, Dick;
Open Access English
  • Published: 01 Jan 2012
  • Country: Netherlands
textabstractIn this article, the authors assess the current position regarding the debate over article 17 of the OECD Model (2010) and whether or not the provision should be amended, or even be considered for removal from the OECD Model.
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54 references, page 1 of 4

1. This article is based on Seminar E (the “Seminar”), the subject of which was “IFA/OECD: red card 17”, of the 2010 Rome IFA Congress. The panel members consisted of Mary Bennett (OECD), Andrew Dawson (United Kingdom), Prof. Dr Xavier Oberson (Switzerland), Michael Pfeifer (United States), Aart Roelofsen (Netherlands) and Jacques Sasseville (OECD). The Seminar was chaired by Richard Vann (Australia) with the help of Mario Tenore (Italy) as panel secretary. The facts of the case studies were drafted by Jacques Sasseville.

2. OECD Model Tax Convention on Income and on Capital (condensed version) art. 17, at 32 (22 July 2010), Models IBFD.

3. OECD, Taxation of Entertainers, Artistes and Sportsmen, Issues in International Taxation No. 2 (1987).

4. See OECD Model Tax Convention on Income and on Capital: Commentary on Article 17 para. 10 at 273 (22 July 2010), Models IBFD, which states that countries can decide to tax the gross performance income, but then need to apply a low tax rate. Since 2008, this paragraph also provides a specimen treaty provision in tax treaties for net taxation at source, but this has not yet made much headway in actual tax treaties.

5. See, for examples and a survey about deductible expenses, and tax credits, respectively, D. Molenaar, Taxation of International Performing Artistes chap. 8 and sec. 7.2.7. (IBFD 2005), Online Books, IBFD.

6. OECD Model Tax Convention on Income and on Capital: Commentary on Article 17 para. 10 (17 July 2008), Models IBFD.

7. OECD, Discussion Draft on the Application of Article 17 (Artistes and Sportsmen) of the OECD Model Tax Convention, International Organizations' Documents, IBFD, also available at Article 17 was also discussed in 1995 at the IFA Congress in Cannes. See IFA Congress Seminar Series Vol. 20d, Taxation of Non-Resident Entertainers (Kluwer Law International 1995).

8. OECD Model Tax Convention on Income and on Capital (30 July 1963), Models IBFD.

9. OEEC, The elimination of double taxation, 2nd Report by the Fiscal Committee of the OEEC pp. 28 and 41-42 (1959). The OEEC archives are now available at The relevant documents leading to the 1959 report are: FC/WP10(57)1; FC/WP10(58)1; FC/M(58)1; FC/M(58)3; FC/M(58)4; FC/M(59)1; FC/M(59)3; FC(58)7; and FC(59)2. The interesting variations are that the article was originally part of the independent personal services article and, therefore, did not apply to employees. At the suggestion of Switzerland, it became a free standing article which, therefore, also applied to employees and was extended, it seems, to cover income of promoters (“those performing for the account of purveyors of entertainment and the purveyors themselves”), and, finally, it was cut back to public entertainers (with a list including artistes of various kinds, musicians and athletes). The emphasis was on income arising from “public performance” in a state though those words disappeared from the final draft.

10. OECD Model Tax Convention on Income and on Capital (11 Apr. 1977), Models IBFD.

11. OECD Model Tax Convention on Income and on Capital (1 Sept. 1992), Models IBFD.

12. See OECD, supra n. 3, at paras. 88-90. The 1992 change is currently reflected in para. 11, at 273 of the OECD Model: Commentary on Article 17 (2010).

13. The change attracted some criticism at the time as an undesirable u-turn in the Commentary and has been used as a reason why later Commentaries should not be used to interpret tax treaties signed earlier (see D. Ward et al., The Interpretation of Income Tax Treaties with Particular Reference to the Commentaries on the OECD Model p. 83 (IBFD 2005).

14. In the 1987 OECD Report, supra n. 3, at Annex, para. 6, Canada and the United States made an Observation on, i.e. disagreed with, the new Commentary. In para. 16, at 275 of the OECD Model: Commentary on Article 17 (2010), this has changed to a Reservation proposing the use of a different version of the paragraph and includes Switzerland.

15. US Model Income Tax Convention art. 16 (15 Nov. 2006), Models IBFD and Technical Explanation (2006), Models IBFD. The US Model (2006) and Technical Explanation are also available at and, respectively.

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