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2. The term ‘professional services’ includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.”

Article 14 is no longer included in most treaties concluded between OECD countries, although the article is still present in treaties negotiated before 2000. Indeed, if the same taxation outcome were to result, irrespective of whether the independent personal services were dealt with under Article 7 or Article 14, there would seem to be little point in continuing to include the provision in treaties.

However. Article 14 is open to different interpretations. Furthermore, many countries prefer to follow the UN Model approach and these countries continue to include a specific provision that extends source taxing rights with respect to independent personal services to income from such services performed in the jurisdiction over a significant period, as well as to income attributable to a fixed base.

One of the areas of uncertainty with respect to Article 14 is to whom it applies. While the personal scope of the article is of little importance if the same taxation treatment would apply under both Article 7 and Article 14. it would be significant if Article 14 provided for, or was interpreted in a way that resulted in. a different tax outcome from that pertaining under Article 7. Article 14 of the UN Model and the former OECD Article 14 apply to income “derived by a resident of a Contracting State” in respect of professional services or other activities of an independent character. Branch reporters are almost equally divided as to whether the article would be treated in their jurisdiction as applying only to individuals and groups of individuals such as professional partnerships, or whether it could also apply to legal entities such as companies. To provide certainty in this respect, some jurisdictions prefer to clarify specifically to whom the article applies. For example. Australia, Chile, South Africa and Sweden generally limit the scope of the article to individuals, while some treaties specifically include corporations or other legal entities, e.g. a number of treaties negotiated by Brazil and Luxembourg.

 

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