15-07-2014 / Update of the OECD Model Tax Convention: more text about Article 17 for artistes and sportsmen


Today, the OECD has published the Update of the Model Tax Convention with much more text about Art. 17 for artistes and sportsmen than before. The Commentary on Art. 17  has been changed, as was already announced. See attachment for the new text of this Commentary.

The Commentary does not work directly, but is a recommendation for Member States when negotiating new treaties and interpreting existing treaties. 

The new Commentary on Art. 17 has the following options:

  • Paragraph 2: exemption for salary payments to employed artistes and sportsmen. This was already available in the old Commentary, but now a clear text proposal is given.
  • Paragraph 10: deduction of expenses in the state of the performance
  • Paragraph 10.1: a minimum amount under which performance fees are exempted. IMF SDR is equal to EUR 17.000. Unfortunately the OECD recommends in Par. 10.3 to tax the income first and refund only after the year, which is a major administrative obstacle.
  • Paragraph 14: exemption for subsidized artistes and sportsmen
  • Paragraph 14.1: payments from teams and groups to individual artistes and sportsmen can be exempted in the performance state, comparable to Par. 2.

In the report of 26 June 2014, with the title "Issues related to Article 17 of the OECD Model Tax Convention", the changes are further explained (see attachment). 

This spring, the OECD had already made clear that the removal of Art. 17 had been discussed, but that it had not received much support from the Member States (see attached letter of 7 May 2014). This is also discussed in Part 1 of the report of 26 June 2014.

Our conclusion is that this Update is very disappointing. Artistes and sportsmen are not helped by this for taking away the risk of international double taxation.  More work needs to be done to improve their tax position.

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