Introduction
Evolution of Article 12A on fees for technical services
The UN Committee of Experts on International Cooperation in Tax Matters (the “Committee”)
has dealt with issues on the taxation of income from technical, managerial, consultancy and
other similar services (“technical services”) within the UN Model especially since 2008.
2
In its
eight session in 2012 the majority of members agreed in principle (by majority vote) on the
inclusion of a new article dealing with the taxation of fees for technical services. A draft
proposal for an article on fees for technical services was presented at the ninth session of the
Committee in 2013 by Ms. Kana, coordinator of the former Subcommittee on Tax Treatment
of Services (the “Subcommittee”).
3
Based on the draft article and commentary prepared by the
consultant of the Subcommittee Mr. Arnold, a draft article and draft commentary on the
taxation of “fees for technical services” was presented.
4
The twelfth session of the Committee
resulted in the final approval of the text and the commentary of the new article on the taxation
of fees for technical services.
5
Although some tidying up of language was done at the thirteenth
and fourteenth sessions, the new article on “fees for technical services” will be assigned article
12A in the 2017 UN Model .
6
Finally, minor changes in the new article 12A and its commentary
have been made at the fourteenth session of the Committee.
7
Nature of “fees for technical services”
2. The term “fees for technical services” is defined as payments in consideration of
technical, managerial and consultancy services. Hereby the rendering of services must include
the application of specialized knowledge, skill or expertise or the transfer of knowledge, skill
or expertise other than royalties in the meaning of article 12 (3) of the UN Model.
8
According
to article 12 (3) of the UN Model 2011, the term “royalties” includes the “use of, or the right
to use, any copyright of literary, artistic or scientific work including cinematograph films, or
films or tapes used for radio or television broadcasting, any patent, trademark, design or
model, plan, secret formula or process, or for the use of, or the right to use, industrial,
commercial or scientific equipment or for information concerning industrial, commercial or
2
UN, Committee of Experts on International Cooperation in Tax Matters, Secretariat Note - Recent Work of the
Committee on Tax Treatment of Services, E/C.18/2013/CRP.17 (2013), at 2 et seq.
3
UN, Committee of Experts on International Cooperation in Tax Matters, Report on the ninth session, E/2013/45-
E/C.18/2013/6 (2013), paras. 56 et seq.
4
UN, Committee of Experts on International Cooperation in Tax Matters, Note from the Coordinator of the
Subcommittee on Tax Treatment of Services: Draft Article and Commentary on Technical Services
E/C.18/2014/CRP.8 (2014).
5
UN, Committee of Experts on International Cooperation in Tax Matters, Report on the twelfth and thirteenth
sessions, E/2016/45-E/C.18/2016/7 (2016), para. 43.
6
Result of the thirteenth session of the Committee, see E/2016/45-E/C.18/2016/7, UN, Committee of Experts
on International Cooperation in Tax Matters, Report on the twelfth and thirteenth sessions, E/2016/45-
E/C.18/2016/7 (2016), para. 41.
7
UN, Committee of Experts on International Cooperation in Tax Matters, Report on the fourteenth session,
E/2017/45-E/C.18/2017/3 (2017), paras. 31 et seq.
8
UN, Committee of Experts on International Cooperation in Tax Matters, Revised Commentary on Article 12A –
Fees for Technical Services, E/C.18/2017/CRP.1 (2017), para. A 62.