Course detail

International Taxation of Incomes

FP-OitiPAcad. year: 2021/2022

The course deals with the issue of the international taxation of income. In this course students are familiarized with the problems of international double taxation and methods for its elimination. Attention is also paid to legislative regulation in the European Union.

Language of instruction

English

Number of ECTS credits

4

Mode of study

Not applicable.

Guarantor

doc. Ing. Mgr. Karel Brychta, Ph.D.

Department

Institute of Finances (ÚF)

Learning outcomes of the course unit

Students will know the rules of the international taxation of income contained in agreements on the avoidance of double taxation as well as in Czech legislation. Students at the same time will know the duties of tax subjects falling under the international taxation of income in the Czech Republic.

Students will be able to identify the duties linked to the taxation of the income of tax residents and non-residents of the Czech Republic and in simpler cases determine their resulting tax liabilities.

Students will know how to interpret and apply the basic norms of the international taxation of income in agreements on the avoidance of double taxation and in the Czech Income Tax Act. Students will know how to propose and use the instruments of tax optimisation in the international taxation of income.

Prerequisites

Knowledge of issues in the taxation of the incomes of individuals and legal entities.

Co-requisites

Not applicable.

Planned learning activities and teaching methods

The teaching is in the form of lectures which explain the basic principles and the rules contained in the relevant legislation. The interpretation is drawn from examples and assumes the assistance of students.

Assesment methods and criteria linked to learning outcomes

Examination requirements: knowledge of the material covered and its practical application.

The course ends with a written examination which is made up of two main parts:

1. Written test (test contains 15 questions with 3 possible answers (A, B, C); only one answer is correct). It is necessary to get at least 50% of the possible points (i.e. at least 8 points out of 15). The test takes 15 minutes.
- correct answer (1 point)
- no answer (0 point)
- incorrect answer (- 1 point)

2. Examples – max. 30 points (75 min.)
- solving numerical examples demonstrating familiarity with the issues and the practical ability to apply the lessons learned
- always a more complex example to determine the resulting tax liability of tax resident from receiving foreign income
- it is necessary to gain at least 50% of the possible points (i.e. 15 points out of 30)

The examination is classified according to the ECTS scale.

Course curriculum

1. International taxation of incomes – general introduction (basic terms, legal regulation, specificity of the situation in the EU, subjects „operating“ in the international taxation of incomes).
2. Double tax treaties (essence, objects, model treaties, structure of the treaties, scope, princip of conditional application priority).
3. Tax residency and its determination, tax residents and taxation of their incomes (in general), tax non-residents and taxation of their incomes (in general), conversion of currency.
4. Taxation of incomes of tax non-residents from the sources in the Czech Republic (duties of payers, duties of tax-payers, possibilities of tax optimization for tax non-residents of the Czech Republic compared to tax residents of the Czech Republic).
5. Rules for taxation of selected incomes as stated in double tax treaties – incomes from immovable property, capital gains, incomes from employment
6. Rules for taxation of selected incomes as stated in double tax treaties – director´s fees, enternainers and sportspersons, pensions.
7. Rules for taxation of selected incomes as stated in double tax treaties – taxation of business profits.
8. Rules for taxation of selected incomes as stated in double tax treaties – dividends, interest and royalties.
9. Taxation of tax residents – methods for avoidance of double taxation (description, principles, Article 38f of Act on Income Taxes).
10. Taxation of tax residents – application of methods for avoidance of double taxation.

Work placements

Not applicable.

Aims

The main objective of the course is not only to provide students with the theoretical fundamentals of the issues of the international taxation of income, but also the ability to apply practically the knowledge gained. This requires knowledge of the principles of international taxation of income and also the specific rules contained in agreements on double taxation, as well as the relevant Czech legislation.

Specification of controlled education, way of implementation and compensation for absences

Not applicable.

Recommended optional programme components

Not applicable.

Prerequisites and corequisites

Not applicable.

Basic literature

LANG, Michael. Introduction to the law of double taxation conventions. Amsterdam: IBFD, 2010, 222 p. 1st edition. ISBN 90-872-2082-0.
OECD (2014), Model Tax Convention on Income and on Capital: Condensed Version 2014, OECD Publishing, Paris. DOI: http://dx.doi.org/10.1787/mtc_cond-2014-en

Recommended reading

BRYCHTA, K. Assessment of Consistency of the Czech Tax Law with European Union Law with a View to Non-Residents Taxation. ACTA VŠFS. 2011. 5(1). p. 74 - 92. ISSN 1802-792X.
BRYCHTA, K. Development of the Legislative Regulation of the Taxation of Income of Non-Residents in Transitional Economies – The Case of the Czech Republic. Transformations in Business & Economics. 2013. 12(3). p. 72 - 92. ISSN 1648-4460.
LANG, Michael, Pasquale PISTONE, Josef SCHUCH a Claus STARINGER. Introduction to European tax law on direct taxation. 2nd ed. Wien: Linde, 2010, 223 s. ISBN 978-3-7073-1764-0.

Classification of course in study plans

  • Programme MGR-MEO Master's 2 year of study, summer semester, compulsory-optional

Type of course unit

 

Lecture

26 hod., optionally

Teacher / Lecturer

doc. Ing. Mgr. Karel Brychta, Ph.D.

Syllabus

1. International taxation of incomes – general introduction (basic terms, legal regulation, specificity of the situation in the EU, subjects „operating“ in the international taxation of incomes).
2. Double tax treaties (essence, objects, model treaties, structure of the treaties, scope, princip of conditional application priority).
3. Tax residency and its determination, tax residents and taxation of their incomes (in general), tax non-residents and taxation of their incomes (in general), conversion of currency.
4. Taxation of incomes of tax non-residents from the sources in the Czech Republic (duties of payers, duties of tax-payers, possibilities of tax optimization for tax non-residents of the Czech Republic compared to tax residents of the Czech Republic).
5. Rules for taxation of selected incomes as stated in double tax treaties – incomes from immovable property, capital gains, incomes from employment
6. Rules for taxation of selected incomes as stated in double tax treaties – director´s fees, enternainers and sportspersons, pensions.
7. Rules for taxation of selected incomes as stated in double tax treaties – taxation of business profits.
8. Rules for taxation of selected incomes as stated in double tax treaties – dividends, interest and royalties.
9. Taxation of tax residents – methods for avoidance of double taxation (description, principles, Article 38f of Act on Income Taxes).
10. Taxation of tax residents – application of methods for avoidance of double taxation.
11. Introduction to European tax law in direct taxes.
12. Reflexion of EU direct tax law in Czech tax acts.
13. European Court of Justice case law in international taxation of incomes.