1. Koenen en Co is lid van Nexia International, het wereldwijde netwerk van onafhankelijke accountants- en advieskantoren1 E-Commerce and international tax issues ETG, MALTA February 5, 2010 Chris Leenders

2. 2 E-Commerce and international tax issues I  Residence vs. source state  Qualification issues -> business profits or royalty? download a software-tool  Transfer pricing/profit allocation issues  VAT issues -> place of supply  Compliance issues-> digifraud -> proof of export -> tax status of counterparty  Tie breaker-> videoconferencing -> POEM?

3. 3 E-Commerce and international tax issues II  Right to tax Business Corp OfficeAgent Customers Webserver US EU Royalties

4. 4 E-Commerce and international tax issues III  When is there sufficient nexus -PC of web surfer -Telecom network -Webservers -Software -Web application -Administration, payment, distribution  Working party OECD (only civil servants input)  TAG (civil servants plus business input)

5. 5 E-Commerce and international tax issues IV  Software: good or license for use of intangible  Downloading of digitized goods: product or rendering services or IP license  Perception of the customer relevant?  Fixed automated equipment = PE?  Human intervention necessary?  Is a server at the disposal of?  Preparatory or auxiliary activities?

6. 6 E-Commerce and international tax issues V  Profit allocation = the real problem  Virtual place of business = PE? Head Office CustomerSmart Server US EU Tax Haven

7. 7 E-Commerce and international tax issues VI Checklist -Physical Equipment? -Fixed at a specific place? -Function in enterprice? -At the disposal of enterprise? Fixed place of Business Preparatory of Auxiliary ? Core Function PE Profit Allocation No permanent establishment NOYES NO