Taxation of investment income and capital gains

This chapter will focus on both the domestic and tax treaty notions of investment income (namely, income from immovable property, dividends, interest and royalties) and capital gains. Attention will also be paid to some specific issues, including hybrid financing and thin capitalization. Furthermore, the administrative procedures for granting tax treaty benefits with respect to the aforesaid different types of income will be discussed. To this end, this chapter will consider the allocation of taxing rights over these items of income and gains under the United Nations Model Double Taxation Convention between Developed and Developing Countries (United Nations Model Convention) and the Organisation for Economic Co-operation and Development Model Tax Convention on Income and on Capital (OECD Model Convention). With respect to the treaty benefits, the main focus will be on the procedures for the granting of these benefits in the source State, but aspects of double taxation relief in the State of residence of the taxpayer will also be briefly dealt with. Only limited attention will be paid to treaty entitlement and anti-abuse issues, as these aspects are extensively covered in other chapters in this Handbook. Finally, some specific aspects of enforcement will be dealt with.

Sustainable Development Goals:

Peace, Justice and Strong Institutions