Case 1-
Facts: A-Co, domiciled in Saudi Arabia, holds a 100% participation in a company in Italy, B -Co. The participation distributes a dividend to A-Co amounting to 1'500'000 €.
Under the domestic tax law of Italy, dividends are subject to a withholding tax at the rate of 27%. The double taxation agreement concluded between Italy and Saudi Arabia follows the rules set up in the OECD model tax convention.
Questions:
- Which rate of withholding tax will apply to the dividends distributed to Saudi Arabia? (Please, indicate the article of the OECD Tax Model convention to which you refer to justify your answer)
- Italy being in the European Union and no withholding tax being levied on the distribution of dividends between a subsidiary company and its parent, if the conditions laid down by the European directive are fulfilled, please indicate which structure could be proposed in order to improve the situation, knowing that Saudi Arabia has concluded double taxation with the following EU countries, apart from Italy:
O Austria WHT on dividends: 5%
O Czech Republic WHT on dividends: 5%
O France WHT on dividends: 5%
O Greece WHT on dividends: 5%
O Ireland WHT on dividends: 5%
O Malta WHT on dividends: 5%
O Netherlands WHT on dividends: 5%
O Poland WHT on dividends: 5%
O Romania WHT on dividends: 5%
O Spain WHT on dividends: 0%
O United Kingdom WHT on dividends: 5%
Out of these countries, Ireland, Malta and the United Kingdom do not foresee withholding tax on the distribution of dividends, according to domestic tax law.
Based on the above information, please indicate all possible solutions.
- Please, describe the conditions which the OECD model tax convention imposes in order for the structure you have proposed to be efficient.
- Also indicate what happens if the above conditions are not fulfilled.
Case 2-
Facts: A-Co, domiciled in Saudi Arabia, intends to conclude an agreement with a company in Switzerland, B-Co, to export dates.
A-Co undertakes to sell an amount of 2'500 kg of dates, quality "A-Premium", for the price of 12 US$ / kg. A-Co will send the dates by plane, to Geneva, before 30th November 2015 (B-Co insists on getting the dates at that time, as it sells a lot of these products just before Christmas). B-Co will get delivery of the dates in Geneva. It will mandate a company to check the products. It undertakes to pay the price immediately after checking of the products is completed.
In order to draft the purchase and sale agreement, both parties agree to get inspired by the United Nations Convention on contracts for the international sale of goods.
Question: Please, draft the agreement between the parties, taking into account that this agreement must be implemented in Saudi Arabia and in Switzerland.
Case3-
Facts: A-Co, domiciled in Saudi Arabia, intends to conclude an agreement with a company in France, B-Co, to export dates.
A-Co undertakes to deliver 10 tons of dates, in January 2016, just after the dates are picked up. Delivery will be made CIF, Le Havre.
Question: By reference to the short form version of the international contract for the sale of goods, please indicate which articles of this contract should be changed, if you would like it to be implemented in Saudi Arabia and why.