Taxation of international shipping and air transport profits generally rests with the enterprise's State, with an exception for substantial foreign shipping activity. Profits from operation of ships or aircraft in international traffic are generally taxable only in the enterprise's Contracting State. Alternative A treats both shipping and air transport profits as taxable solely in that State and extends the rule to pools, joint businesses and international operating agencies. Alternative B treats aircraft profits as taxable only in the enterprise's State but allows the other State to tax allocated shipping profits where its shipping activities are more than casual; such taxed amounts are to be allocated from overall net shipping profits and reduced by a bilaterally negotiated percentage.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Taxation of international shipping and air transport profits generally rests with the enterprise's State, with an exception for substantial foreign shipping activity.
Profits from operation of ships or aircraft in international traffic are generally taxable only in the enterprise's Contracting State. Alternative A treats both shipping and air transport profits as taxable solely in that State and extends the rule to pools, joint businesses and international operating agencies. Alternative B treats aircraft profits as taxable only in the enterprise's State but allows the other State to tax allocated shipping profits where its shipping activities are more than casual; such taxed amounts are to be allocated from overall net shipping profits and reduced by a bilaterally negotiated percentage.
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