14-04-2012 / 2012 - Article 17(3) for Artistes and Sportsmen: Much More than an Exception - INTERTAX

The April 2012 issue of the tax magazine INTERTAX has published the article "Article 17(3) for Artistes and Sportsmen: Much More than an Exception", written by Dr. Dick Molenaar and Dr. Harald Grams. This article discusses the extensive use of Article 17(3) in bilateral tax treaties, where the OECD only mentions it as an option in §14 of its Commentary on Art. 17. Research shows that 66% of the bilateral tax treaties include an Art. 17(3).

With Art. 17(3) subsidized artistes and sportsmen are excluded from Art. 17 and only pay tax in their residence country. Sometimes Art. 17(3) uses another description, such as "non-profit organizations" or "cultural exchange programs", which means that the specific tax treaty needs to be studied before it can be used.

It is positive that many tax treaties take away the practical problems of the exceptional Article 17 with the exception of Article 17(3), but it would be better if not only subsidized artistes and sportsmen could profit from this return to the normal tax rules from the OECD Model but also every other artiste or sportsman in treaty situations. The national withholding tax would then only remain for artistes and sportsmen from non-treaty countries so that tax avoidance behaviour could still be counteracted.


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