| Abstract [eng] |
The aim of this paper is to reveal the peculiarities of the OECD and UN Model Conventions on the avoidance of double taxation, while also addressing the question of which model treaty is more favorable for Lithuania. This paper analyzes the OECD and UN Model Conventions on the avoidance of double taxation, their scope, objectives, and structure. Attention is also given to the comparison of the provisions of the OECD and UN Model Conventions. The analysis showed that the models of double taxation avoidance agreements establish rules ensuring that income is taxed only once. The OECD Model Convention serves as the basis for many double taxation avoidance agreements, but it more strongly reflects the interests of developed, capital-exporting countries and is not favorable to developing states. Therefore, an alternative UN Model Convention was developed, which grants more taxing rights to the source country by introducing additional criteria for determining a permanent establishment, allowing taxation of profits not attributable to a permanent establishment but related to the sale of goods in the source country, and granting exclusive taxing rights to the source country on royalties, technical and digital services, income from professional services, capital gains from the sale of shares, and remuneration of top-level executives. The analysis revealed that it could be beneficial for Lithuania’s state budget if national legislation included provisions allowing the taxation of income earned by foreign entities not through a permanent establishment, but by engaging in activities related to such an establishment, as well as income derived from the transfer of shares in companies holding real estate in Lithuania. It would also be advantageous to establish broader criteria for recognizing a permanent establishment, including situations where a foreign entity maintains goods for delivery in Lithuania or where an insurance company collects premiums within the country. Nevertheless, it should be noted that in the context of Lithuania as a service-exporting country, the inclusion of provisions in double taxation avoidance treaties allowing the source country to tax technical and digital automated services could have a negative impact on national budget revenues. |
