Double taxation agreements (DTAs) are bilateral agreements
that have actually aimed in the past at preventing
double taxation for companies active in the two countries
concluding the agreements. DTAs treat the subsidiary
and parent company as separate entities, according
to where the real business is deemed to take place.
Based on this separate entity approach, there are normally
two ways to tackle double non-taxation: either by
exemption from all taxation in one of the two signatory
states, or by crediting the tax paid in one state for the
tax due in the other. This means that a company will at
most pay the tax in the country with the higher tax rate
or even in the one with the lower, but nothing more.