• Service: Tax, Global Transfer Pricing Services (GTPS)
  • Industry: Financial Services
  • Type: Survey report
  • Date: 12/16/2010

Branch Capital Attribution Tax Survey 2010 - A survey of international practice 

The financial crisis and subsequent economic downturn has led many financial institutions to re-evaluate their business models and activities to try to enhance the use of increasingly scarce resources. Not surprisingly, there is an increased focus on the issue of taxation of branches of overseas banking and insurance entities.


In view of the 2008 OECD Report on the Attribution of Profits to Permanent Establishments (PE) in which the OECD's Committee on Fiscal Affairs provided extensive guidance on how the profits should be attributed to a PE under tax treaties following Article 7 of the Model Convention, KPMG's Global Financial Services Tax Practice updated our previous survey of branch capital attribution produced in 2005. KPMG member firms in 33 countries provided details of domestic tax law and practice. This enabled an assessment of the degree of variation between the principles outlined in the OECD report and the current local position in the countries covered, while also seeking to identify what practical problems currently exist or may be anticipated. This year, the survey has been extended to cover branches of insurance companies in the participating countries, given the focus on branches following Solvency II.


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