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Subparagraph (b) of the UN provision makes it clear that only income derived from activities performed in the jurisdiction may be taxed in that jurisdiction. However, subparagraph (a) allows a jurisdiction to tax services income which is attributable to a fixed base in that jurisdiction. Most branch reporters suggested that, in their jurisdiction, income derived from services performed outside the jurisdiction in which the fixed base is situated could not be attributed to the fixed base for the purposes of applying source taxation under this article. However, a few, including the Netherlands and the UK, expressed the view that the same attribution rules applied to Article 14 as to Article 7, so it was possible for foreign source income to be attributed to the fixed base.

Many branch reporters noted that a few of their treaties included the 1980 UN Model paragraph 1(c) of Article 14, which added a further situation where source taxation was permitted, i.e. where the remuneration for activities in the jurisdiction exceeded a monetary threshold and was paid by a resident of the source jurisdiction or was borne by a PE situated in that jurisdiction. These provisions are generally only found in treaties with a few developing countries, and the monetary amount specified varies considerably from treaty to treaty.

Some treaties provide for a shorter presence test, such as 90 days or 30 days. A few treaties, generally those with developing countries, have no time threshold.

Article 14 does not exclude preparatory and auxiliary activities, and branch reporters did not report treaties concluded by their jurisdictions that provide for such an exclusion.


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