The Use of the OECD Commentary
Elgar Tax Law and Practice series
Chapter 8: INCOME FROM EMPLOYMENT, DIRECTORS’ FEES, AND STUDENTS (ARTT. 15, 16 AND 20)
Art. 15 § 1 provides that, subject to the provisions of Artt. 16, 18 and 19, salaries, wages and other similar remuneration derived by a resident of a CS in respect of employment shall be taxable only in that State unless the employment is exercised in another CS. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State. According to the allocation rule of Art. 15 § 1 taxation of income from employment occurs in the SC where employment activities are carried out, so the RC may tax that income. By contrast if the employment is not exercised in the SC, then the RC exercises exclusive taxation, as pointed out by the Commentary, which affirms that a resident of the RC who derives remuneration, in respect of employment, from sources in the SC cannot be taxed in that SC in respect of that remuneration. The Commentary analyses in detail the conditions for taxation of employment income in the SC, in particular with regard to cases where the income is in the form of benefits in kind or other presumptive forms; explores the exceptions of Artt. 16, 18, 19 to this allocation rule, but also discusses certain issues of tax treatment (exemption or taxation) of foreign employment income in the RC. The Commentary notes that employment is exercised in the place where the employee is physically present when performing the activities for which the employment income is paid, clarifying that the condition
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