Cross-border investment or business may be carried out through an entity having the legal form of a partnership. The use of partnerships for the purpose of crossborder operations involves many complex international tax law problems.
The tax treatment of an arrangement in the original source state of the income, the partnership state (the state under whose laws the partnership is organized) and the residence state of the partners may be unclear and inconsistent.
Partnerships may generally be treated either as separate taxable entities or as transparent entities. The differences in the domestic tax law treatment also lead to problems in the application of tax treaties. This article examines from a Finnish perspective the tax treatment of cross-border income derived through a partnership.