International Sales Law, Tax Relief Methods and Incoterms

Vienna Convention (CISG) — Scope and Application

Vienna Convention (UN Convention on Contracts for the International Sale of Goods, CISG) applies only to the international sale of goods. The parties that sign must be parties to the relevant agreement. It is a contract under which the seller is obliged to deliver the goods and transfer their ownership to the buyer, and the buyer is obliged to receive and pay for those goods at an agreed price. The Convention also states that the commercial character of the parties or of the contract will not be taken into account. The Vienna Convention governs the formation and performance of the contract, including the rights and obligations of both seller and buyer.

Methods to Correct Double Taxation

There are two main approaches to correct double taxation: bilateral international measures (tax treaties) and national measures when no bilateral convention exists.

Bilateral international measures (tax treaties)

Double taxation agreements typically adopt one of several systems:

• Exemption system: Income obtained abroad is not taken into account for taxation in the residence state. There are two types: full exemption and progressive exemption.
• Imputation system: Worldwide income is recorded, including income obtained abroad, and the tax paid abroad is allowed as a credit against tax payable at residence.
• Ordinary imputation system: Imputation is allowed but subject to a limit corresponding to the portion of tax applicable in the state of residence for those foreign-source items.
• Full imputation system: Imputation without limit.

National measures

When there is no bilateral convention, national laws apply. In Spain the relevant regimes include the IRPF and the Ley del Impuesto sobre Sociedades (Corporate Income Tax Law). The general rule in Spanish law is the ordinary imputation system.

Sales Contract Between Barcelona and Buenos Aires

Check the applicable EU regulation to determine whether it can be applied (we must verify whether the relevant parties are EU Member States). If proceedings were in Buenos Aires, we would not be able to apply the EU regulations and would look at internal Spanish regulations (Organic Law of the Judiciary) as necessary.

Sales Contract Between Moscow and Seville

If the defendant is domiciled in Moscow: apply national law. Example reference: judicial organic law; national law such as the LOPJ (Ley Orgánica del Poder Judicial).

If the defendant is in Spain: apply Community regulation (EU law) where applicable.

Incoterms — Purpose, Scope and Limits

• Incoterms do not regulate everything.
• They are not applicable law by themselves; they supplement a contract by clarifying delivery terms.
• Incoterms are international rules accepted by many governments and parties involved in international transport of goods.
• Objective: establish criteria about the distribution of expenses and the allocation of risk between seller and buyer in an international sale.
• Regulation of: duties, transport, insurance, and loading/unloading responsibilities.

Incoterms are international standards accepted by many governments and the parties involved in international transportation of goods. They regulate four basic questions related to delivery of goods:

1. Customs formalities
2. Transport
3. Insurance
4. Loading and unloading of goods

The objective of Incoterms is to establish criteria for the distribution of costs and the transfer of risks between sellers and buyers in an international sales contract.