Convention on elimination of double taxation - adjustment of profits of associated companies ()
DESCRIPTION: "Euopean Legal Act introducing a procedure to eliminate double taxation in specific situations. For example, where branches of multinational companies (associated companies) which are based in different EU countries are taxed by more than one EU country as a result of an upward adjustment in its profits in another EU country. "
eira:ABBeira:Non-bindingInstrumentRequirement
dct:modified2023-07-26
dct:spatialEU
dct:identifierhttp://data.europa.eu/eli/dir/1990/434/oj
dct:titleConvention on elimination of double taxation - adjustment of profits of associated companies
dct:descriptionThis regulation pertains to the elimination of double taxation in connection with the adjustment of profits of associated enterprises. It is designed to prevent the same income from being taxed by two or more countries. This is achieved by allowing the tax paid in one country to be offset against the tax payable in the other, thus eliminating double taxation.
dct:publisherEUR-Lex
dct:sourcehttps://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A31990L0434
skos:exampleFor instance, if a multinational company has a subsidiary in Country A and Country B, and the subsidiary in Country A makes a profit of $100,000, this profit will be taxed in Country A. If the same profit is also taxed in Country B, the company can claim a tax credit in Country B for the tax already paid in Country A, thus avoiding double taxation.
eira:concepteira:SolutionBuildingBlock
skos:noteThe regulation is based on the principle that profits should be taxed where the value is created. It provides for a mechanism to adjust the profits of associated companies in different countries to ensure that the profits are allocated correctly and taxed only once. This is particularly relevant for multinational companies that have subsidiaries or branches in different countries.
eira:viewLV-Binding Power and Jurisdiction