1: Please explain which country should provide the prevention of double taxation regarding the income which could be allocated to the shop (country where Gnome BV is resident or the country where the permanent establishment is situated)?

The shop is a big success. Gnome BV decides to incorporate a subsidiary in the other country. Gnome BV is the sole shareholder of the subsidiary. Assume that the Netherlands applies the ordinary credit method for the prevention of double taxation.

Dutch income: 1,500,000.

The income attributable to the subsidiary (in the other state amounts to 500,000. Assume that the Dutch tax rate tax rate: 20% (till 600,000) and 30% for all the income exceeding the 600,000.

The tax rate of the other state (where the subsidiary is resident) is 35% (flat rate).

2: Please calculate the total corporation tax due for the subsidiary.

3: Please calculate the Dutch corporation tax due by Gnome BV.

There are two individual shareholders who started a flourishing business in the manufacturing and sale of garden gnomes. Garden gnome is a figurine of a small humanoid creature, usually wearing a pointy hat, displayed for the purpose of ornamentation on front lawns or in gardens A Dutch limited liability company called: Gnome BV was incorporated by the two business partners and the shares of Gnome BV are equally held by them. Gnome BV holds 100% of the shares of Gnome Production Ltd, which is a tax resident of Vietnam. The functions of Gnome Production Ltd are the following Purchase of the raw materials for the production of the garden gnomes, and Production of the garden gnomes, and, finally shipping the Gnomes to the Netherlands. All the Gnomes are sold by Gnome BV to the end consumers via various shops and web shops (owned by Gnome BV) in the Netherlands. After a couple of very successful years Gnome BV is looking for options to expand the business abroad. After a thorough marketing research it appears that customers in another country are also interested in the garden gnomes. Assume that all the countries have concluded tax treaties with each other and that these treaties are similar to the OECD tax treaty There are two individual shareholders who started a flourishing business in the manufacturing and sale of garden gnomes. Garden gnome is a figurine of a small humanoid creature, usually wearing a pointy hat, displayed for the purpose of ornamentation on front lawns or in gardens A Dutch limited liability company called: Gnome BV was incorporated by the two business partners and the shares of Gnome BV are equally held by them. Gnome BV holds 100% of the shares of Gnome Production Ltd, which is a tax resident of Vietnam. The functions of Gnome Production Ltd are the following Purchase of the raw materials for the production of the garden gnomes, and Production of the garden gnomes, and, finally shipping the Gnomes to the Netherlands. All the Gnomes are sold by Gnome BV to the end consumers via various shops and web shops (owned by Gnome BV) in the Netherlands. After a couple of very successful years Gnome BV is looking for options to expand the business abroad. After a thorough marketing research it appears that customers in another country are also interested in the garden gnomes. Assume that all the countries have concluded tax treaties with each other and that these treaties are similar to the OECD tax treaty