EU Cross-Border Leasing and Double Non-taxation

Taxing the leasing of movable assets causes significant practical problems already at the national tax level. Far more complicated taxation problems arise in the scope of cross-border transactions. Regarding the Organisation for Economic Co-operation and Development (OECD) Model Tax Convention on Income and on Capital (OECD Model Treaty), the contracting states have a broad discretion for classifying leasing agreements under the respective treaty articles. Besides, it can be found that actual taxation of leasing transactions often differs from the principles of the OECD Model Treaty. Considering the applicable secondary law within the European Union, in case of international leasing transactions a double non-taxation may occur. The present contribution aims at showing such a taxation gap and indicates possible ways for closing it.