INDUSTRIAL OR COMMERCIAL PROFITS. 1. Industrial or commercial profits of an enterprise of a Contracting State shall be subject to tax only in that Contracting State unless the enterprise carries on trade or business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on trade or business as aforesaid, tax may be imposed by that other Contracting State on the whole of the industrial or commercial profits of the enterprise from sources within that other Contracting State whether or not those profits are attributable to that permanent establishment.
INDUSTRIAL OR COMMERCIAL PROFITS. It is unclear whether the principles espoused in Xxxxx can be extrapolated to other DTAs, which adopt different terminology to that of the Swiss agreement.49 Do the words "industrial or commercial profits"50 in the DTAs between Australia and the United Kingdom and Japan respectively import an additional restriction? What is the effect of the definition of "enterprise" in the agreement with France, which requires that the enterprise be "industrial or commercial"?51 Support for the view that the UK and Japanese agreements may be interpreted similarly to the Swiss agreement is contained within a Note of the Italian General Directorate of Taxes52 which considered the application of Art 4(1) of the DTA between the Netherlands and Italy. The Article reads as follows: Profits derived by a person resident in one of the two States from the exercise of any industrial, agricultural, mining, commercial or other similar activity shall not be taxable in the other State unless the person concerned carries on his activity in that other State through a PE situated therein. The Italian revenue authority ruled, in respect of a company resident in the Netherlands which owned 15% of the shares of an Italian company, being its only activity, that because the Netherlands company was a holding company, the gain was deemed to represent business income with the requisite industrial or commercial flavour. Whether this would be the result in relation to the similarly worded UK and Japanese agreements is not certain. This is primarily because the issue has not been judicially tested in Australia and because the Italian ruling was decided against the background of Italian tax law, under which all activities of companies were deemed to be business activities.53 Nevertheless, applying the majority decision in Xxxxx, provided that the alienation of shares in an Australian subsidiary by a non-resident is entered into for business or commercial purposes, the non- resident could be seen to derive industrial or commercial profits from an industrial or commercial enterprise. Reference should be made to s 66(1) of the Finance Xxx 0000 (UK),54 which provides that subject to certain exceptions, a company incorporated in the UK is to be regarded as a resident of the UK for the purpose of various taxing statutes. Of one of the exceptions to the general rule, the UK Inland Revenue have stated: The exceptions from the incorporation test in Sch 7 depend in part on the company carrying on business at a...
INDUSTRIAL OR COMMERCIAL PROFITS. 1. The Industrial or commercial profits of a United Kingdom enterprise shall not be subject to Manx tax unless the enterprise is engaged in trade or business in the Island through a permanent establishment situated therein. If it is so engaged, tax may be imposed on those profits by the Island but only on so much of them as is attributable to that permanent establishment.
