Venezuela, Expatriates and FX

As is the case with other jurisdictions, the question of whether there is a PE in Venezuela is the most common question taxpayers, tax practitioners and SENIAT have to face when dealing with cross-border transactions.

The importance of the interpretation of the PE definition and the consequences stemming from it under the extensive network of tax treaties currently in place in Venezuela (26 tax treaties on income) is largely overshadowed by the lack of significant guidance or authority dealing with it from domestic sources and the fact that as a non-member of the OECD neither the model nor the commentaries are binding.
There is no statutory guidance available at the current time for interpreting the tax treaty concept of a PE under article 5 of the OECD and UN models, as it is not customary in Venezuela for Congress ( Asamblea Nacional) to "regulate" or condition the application of treaties beyond the provisions in the tax treaty itself, as approved by Congress.

On the other hand, there is limited or no access at all to preparatory works or agreements, arrangements or instruments exchanged between treaty negotiators in connection with the conclusion of tax treaties, or subsequent exchanges pertaining to the application of the tax treaties.

As such, sources of authority are mostly limited to case law and to guidance issued by SENIAT in advisory letter rulings or particular deficiency claims, neither of which has a stare decisis status and hence may change without the need for proper or in-depth justification.

It should be noted that advisory letter rulings are randomly made public by SENIAT and therefore, although the reporters have made an extensive effort to research all available guidance with respect to the notion of PE, it is possible that other relevant advisory letter rulings exist which have not been covered by this report.
When available, reference is made in this report to evidence in the Venezuelan context. Although there has been some modest evolution in the analysis of the definition by SENIAT, leaning towards the use of the OECD and UN model commentaries, when applicable, there is still a long way to go to obtain a clear understanding of the term under applicable tax treaties.

The report evidences the view of the reporters that to a reasonably large extent significant weight has and should continue to be given - absent domestic authority - to the OECD and UN model commentaries when interpreting the PE definition under Venezuelan tax treaties.