The Impact of Art XIV GATS for Tax Treaties Sample Clauses

The Impact of Art XIV GATS for Tax Treaties. Denmark has applicable tax treaties with approximately 80 foreign countries, including all Member States of the EU and the European Economic Area. Ba- sically, most of the 80 tax treaties are made with reference to the OECD MC. Art XIV GATS contains some general exceptions to the GATS. The pur- pose seems to avoid that justified measures are applied in a manner which otherwise would constitute an arbitrary or unjustifiable discrimination be- tween countries or a disguised restriction on trade in services. Therefore, the exceptions cover provisions regarding a) public order, b) health protection, c) legal compliance, d) the imposition or collection of direct taxes and e) tax treaties. In this context item d) and item e) seem especially interesting. Tax provi- sions that could be seen as »arbitrary or unjustifiable discrimination« and/or »disguised restriction« could for instance be source based taxation, where the service provider is non-resident, and where the taxation is more burdensome than if the service provider was resident. If the service provider is not covered by a tax treaty, and the tax paid is not offset by the residence country by means of a tax credit or an exemption, the source based taxation could serve as a fiscal barrier to the free trade of this service. However, as stated above the MFN Clause in Art II GATS can be chal- lenged by the impact of Art XIV GATS, i.e. a MFN Clause seems only appli- cable if it is explicitly laid down in a bilateral tax treaty. This conclusion will be substantiated in the following.