Double Taxation and International Taxation Agreement

"Abstract This study attempts to demonstrate the complexities involved in the characterization of payments related to the use of personality rights such as the name, the image, the voice of artistes and sportsmen. The article is divided in two parts. Part I deals with the tax treaty provisions concerning the characterization of these payments. The study focuses on the application of the artistes article and the royalty article in tax treaties, making evident the different trends in the application of tax treaties. It also shows the tax consequences of using intermediary companies serving as legal owners of the image and other personality rights. In Part I we also present case law relevant for our study, making evident the current problems of characterization. Part II develops possible solutions to properly address the problems presented in Part I. The work intends to provide a positive contribution to problems relating to income characterization by demonstrating: First, how non-tax law and a lack of tax treaty provisions for the use of separate legal entities may distort or help in the process of income characterization under DTCs. Second by demonstrating that, amongst others, the differences between active and passive income are not consistently taken into account by tax treaties following the OECD MTC. "