The existence of several agreements against double taxation is obviously not a good thing (for example. B, a tax treaty between the United States and Italy or a double taxation agreement between Italy and the United Kingdom), because it increases the risk of using them to avoid taxation through a “dual international non-taxation regime,” thus creating the phenomenon of so-called “treaty abuse.” OECD Model Convention and recommendations on the tax treaty. The 2003 OECD model contract recommends, in Article 23A, paragraph 2, the “ordinary credit” method for passive dividend income (Article 10) and interest (Article 11). Article 23B of the OECD Model Tax Convention follows the views of the United States and the United Kingdom and generally recommends the application of the “normal credit” method to countries wishing to apply the credit system to all types of foreign income, both active and passive. A clearer position in the OECD`s tax framework? It should be noted that the recommendation of the tax credit method in paragraph 12 of the 2003 commentary was not explicitly taken up by Article 23A, paragraph 2 of the OECD model agreement. Article 23 generally introduces methods for eliminating double taxation and proposes two options: the tax-exempt method (Article 23A) or the tax credit method (Article 23B). But in Article 23A, a second paragraph has been added, which imposes only the dividend tax credit (Article 10) and interest (Article 11). Contracts between Turkey and most countries generally comply with the OECD`s model tax convention using the normal method of taxation of savings (see.B. Article 23/paragraphs 1 and 3 of the United Kingdom Treaty, Article 23/(1/b/ii) and (2/c) of the Dutch Treaty, Article 23/2/b of the Lux Treaty, Article 23/paragraphs 2 and 3 of the Italian Treaty, Article 22/1/a of the Spanish Treaty, Article 23/paragraph 1 and (2) of the Treaty. On the other hand, with regard to dividends, there are a number of contracts that do not comply with Article 23A/2, paragraph 2, second paragraph, of the OECD model tax treaty, which imposes the application of the exemption method (cf.B.
Article 22/1/b of the Spanish Treaty, Article 23/1/c of the Portuguese Treaty, Article 23/1/a) and (2/b) of the Dutch Treaty). In order to avoid the risk of double taxation, it is recommended to ask the Italian tax authorities for a certificate of residence in tax which will be presented to the foreign country where the income was collected in a given year. If, in the same year, different incomes were obtained in a foreign country and are subject to the same agreement, a single tax certificate is issued. Double taxation refers to cases in which two different countries have the right to collect taxes on income collected on their territory by the same subject.