Compensation Regimes: An Innovative Tax Treaty Provision when Applied to Cross-border Regions

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

Cross-border workers fall within a broader category of non-residents as they maintain their original tax residence while often earning income from both the source state and the residence state. They may as a result not always utilize the same tax deductions and/or allowances as residents. States that have a large amount of cross-border workers and/or problems due to the taxation and social security contributions applicable to these workers have chosen to implement specific provisions into their tax treaties. Compensation regimes would be examples of such tax treaty provisions. These regimes are, as of today, rare. As an example, Sweden and Denmark have implemented a horizontal compensation regime between themselves and Belgium and the Netherlands have implemented both a horizontal- and vertical compensation regime. A horizontal compensation regime aims to compensate revenue losses attributable to cross-border working between the contracting states while a vertical compensation regime aims to regulate a compensation between the contracting state and the individual cross-border worker. This article comprises a discussion and an analysis of how compensation regimes may be utilized as tax treaty instruments dividing tax revenues between the contracting states and involved municipalities in addition to strengthening predictability, tax neutrality and non-discrimination in the case of the individual cross-border worker. Benefits which assist in increasing the economic integration in cross-border regions as both individual workers and employers would be more inclined to work/employ transnationally.
Original languageEnglish
JournalFIRE Journal: UCPH Fiscal Relations Law Journal
Issue number2
Pages (from-to)1-19
Publication statusPublished - 2019
Externally publishedYes

Cite this

@article{647c614ba4604ee3889412a76142a24f,
title = "Compensation Regimes: An Innovative Tax Treaty Provision when Applied to Cross-border Regions",
abstract = "Cross-border workers fall within a broader category of non-residents as they maintain their original tax residence while often earning income from both the source state and the residence state. They may as a result not always utilize the same tax deductions and/or allowances as residents. States that have a large amount of cross-border workers and/or problems due to the taxation and social security contributions applicable to these workers have chosen to implement specific provisions into their tax treaties. Compensation regimes would be examples of such tax treaty provisions. These regimes are, as of today, rare. As an example, Sweden and Denmark have implemented a horizontal compensation regime between themselves and Belgium and the Netherlands have implemented both a horizontal- and vertical compensation regime. A horizontal compensation regime aims to compensate revenue losses attributable to cross-border working between the contracting states while a vertical compensation regime aims to regulate a compensation between the contracting state and the individual cross-border worker. This article comprises a discussion and an analysis of how compensation regimes may be utilized as tax treaty instruments dividing tax revenues between the contracting states and involved municipalities in addition to strengthening predictability, tax neutrality and non-discrimination in the case of the individual cross-border worker. Benefits which assist in increasing the economic integration in cross-border regions as both individual workers and employers would be more inclined to work/employ transnationally.",
author = "Yvette Lind",
year = "2019",
language = "English",
pages = "1--19",
journal = "FIRE Journal: UCPH Fiscal Relations Law Journal",
publisher = "K{\o}benhavns Universitet",
number = "2",

}

Compensation Regimes : An Innovative Tax Treaty Provision when Applied to Cross-border Regions. / Lind, Yvette .

In: FIRE Journal: UCPH Fiscal Relations Law Journal, No. 2, 2019, p. 1-19.

Research output: Contribution to journalJournal articleResearchpeer-review

TY - JOUR

T1 - Compensation Regimes

T2 - An Innovative Tax Treaty Provision when Applied to Cross-border Regions

AU - Lind, Yvette

PY - 2019

Y1 - 2019

N2 - Cross-border workers fall within a broader category of non-residents as they maintain their original tax residence while often earning income from both the source state and the residence state. They may as a result not always utilize the same tax deductions and/or allowances as residents. States that have a large amount of cross-border workers and/or problems due to the taxation and social security contributions applicable to these workers have chosen to implement specific provisions into their tax treaties. Compensation regimes would be examples of such tax treaty provisions. These regimes are, as of today, rare. As an example, Sweden and Denmark have implemented a horizontal compensation regime between themselves and Belgium and the Netherlands have implemented both a horizontal- and vertical compensation regime. A horizontal compensation regime aims to compensate revenue losses attributable to cross-border working between the contracting states while a vertical compensation regime aims to regulate a compensation between the contracting state and the individual cross-border worker. This article comprises a discussion and an analysis of how compensation regimes may be utilized as tax treaty instruments dividing tax revenues between the contracting states and involved municipalities in addition to strengthening predictability, tax neutrality and non-discrimination in the case of the individual cross-border worker. Benefits which assist in increasing the economic integration in cross-border regions as both individual workers and employers would be more inclined to work/employ transnationally.

AB - Cross-border workers fall within a broader category of non-residents as they maintain their original tax residence while often earning income from both the source state and the residence state. They may as a result not always utilize the same tax deductions and/or allowances as residents. States that have a large amount of cross-border workers and/or problems due to the taxation and social security contributions applicable to these workers have chosen to implement specific provisions into their tax treaties. Compensation regimes would be examples of such tax treaty provisions. These regimes are, as of today, rare. As an example, Sweden and Denmark have implemented a horizontal compensation regime between themselves and Belgium and the Netherlands have implemented both a horizontal- and vertical compensation regime. A horizontal compensation regime aims to compensate revenue losses attributable to cross-border working between the contracting states while a vertical compensation regime aims to regulate a compensation between the contracting state and the individual cross-border worker. This article comprises a discussion and an analysis of how compensation regimes may be utilized as tax treaty instruments dividing tax revenues between the contracting states and involved municipalities in addition to strengthening predictability, tax neutrality and non-discrimination in the case of the individual cross-border worker. Benefits which assist in increasing the economic integration in cross-border regions as both individual workers and employers would be more inclined to work/employ transnationally.

M3 - Journal article

SP - 1

EP - 19

JO - FIRE Journal: UCPH Fiscal Relations Law Journal

JF - FIRE Journal: UCPH Fiscal Relations Law Journal

IS - 2

ER -