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In some cases, services income of a non-resident SP, whether an individual or a legal person, and irrespective of the nature of the services, will be considered to have sufficient nexus with a jurisdiction to be subject to taxation only if the activities meet certain threshold conditions. The threshold varies from country to country, but is usually similar to the fixed place of business and dependent agent PE threshold found in tax treaties. This is the approach adopted in some European countries, such as Denmark, Finland, Hungary, the Netherlands and Ukraine.

In a number of other, mainly European, countries, a distinction is made between business income and independent personal or professional services. In these countries, the domestic law equivalent of a PE threshold applies only to business income, while no such threshold applies to income from independent personal or professional services.

As noted above, the actual PE equivalent threshold differs from country to country. Though usually similar to the OECD Model definition of PE. the domestic definition is often broader than that definition. In the Czech Republic, for instance, the definition of PE includes services performed in the Czech Republic that meet a time threshold (six months).

Once a PE is established in a jurisdiction, the income that is liable to tax in that jurisdiction is normally the income attributable to the PE. Under Belgian law, it is clear that the source of the business profits is irrelevant in determining whether the services income is subject to tax in Belgium. Profit derived from outside Belgium by a non-resident SP is also taxable in Belgium if the profit has been derived through the intervention of the “Belgian establishment” (domestic law equivalent of PE). Similar rules exist in the UK, and it would appear that other countries would take a similar view.


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