Blog post only Last month, UNCTAD released a guide for policy makers on the tax policy questions involved in decisions to conclude and negotiate a double tax treaty (DTT). Like other UNCTAD publications, it is well written and balanced, though this one is a little more high level than some of the other deep dives… Continue reading

Blog post only Was the OECD BEPS MLI effective and adopted in a relatively short time frame? Yes, as compared to how long it normally took to update a double tax treaty (DTT). But it still took a long time. Ratification and entry into force sometimes took years. And it’s far from over. That’s the… Continue reading

Originally published: December 2023 Treaties should be interpreted in good faith in line with the intentions of the parties. Good faith interpretation matters, because “not only is every state sustained by good faith, as Cicero declares, but also the greater society of states. Aristotle truly that if good faith has been taken away all intercourse… Continue reading

Originally published: August 2023 Nowadays, the OECD Model Convention (MC) suggests double tax treaties (DTTs) resolve dual tax residencies of companies through a mutual agreement procedure (MAP) rather than place of effective management (POEM, https://lnkd.in/eFqk2C7T). That suggestion is not followed all that widely and for good reason, as the following example shows. Vokhland has a thriving… Continue reading

Originally published: July 2023 If you dive into tax treaties (DTTs) emerging countries conclude between themselves, you may encounter clauses that allow both countries to tax income without clear guidance on how double taxation is prevented. I imagine both countries believed that the OECD DTT system was too favourable for resident countries which led them… Continue reading

Originally published: March 2023 I published an article in IBFD Talking Points: Do Bilateral Tax Treaties Distort, Rather than Support, International Trade? Regular followers will be familiar with the argument I make here. Double tax treaties (DTTs) are often portrayed as reducing distortions by tackling double taxation. But the combination of domestic withholding taxes (WHT),… Continue reading

Originally published: March 2023 Great exploration of the question why international tax is still dominated by bilateral double tax treaties (DTTs), even after most other topics of international cooperation have moved to multilateralism. The summary is one word: ‘money’. The stakes involved are direct and the payoff of better cooperation is indirect. The cynical (possibly… Continue reading

Originally published: February 2023 In this Dutch case law in at the lower court, the Dutch tax authorities successfully challenged the tax residence of a Malta SPV and impose Dutch corporate tax and dividend withholding tax (WHT) on the entity. Though quite fact specific, the reasoning of the court spell trouble for many SPVs. The… Continue reading

Originally published: February 2023 Why is international tax organized around bilateral double tax treaties (DTTs)? The end result of that is a complex system of difference in withholding tax rates on cross border investments, generating incentives for treaty shopping and profit shifting. In the BEPS reforms, countries responded by making DTT access more restrictive to… Continue reading

Originally published: December 2022 Tax treaties (DTTs) intend to coordinate tax systems to eliminate double taxation. Divergence in interpretation can undermine this goal. That’s why arbitration is sometimes held up as a solution, even if some argue it undermines sovereignty. Gerrit Groen is defending his PhD on this topic at 11 am CET today (live link here https://lnkd.in/ewV2Bfnb).… Continue reading

Originally published: November 2022 Let’s say you’re a French company and someone is trying to sell you some patents for the Tunisian market. Your projections say the patents will be loss making and there’s also a 15% Tunisian withholding tax (WHT) on royalties. But the seller tells you not to worry because the French tax… Continue reading

Originally published: October 2022 On page 35-48 of this publication dedicated to Rainer Prokisch (https://lnkd.in/ej57Jacp), Yariv Brauner discusses the decline of tax treaties (DTTs) in light of the recent OECD Pillar 1 & 2 agreement. Tax treaty law has been in decline for quite a while now (https://lnkd.in/eiiaEH48) and the pressures I mentioned before are further aided by treaty… Continue reading

Originally published: September 2022 Double tax treaties (DTTs) have good sides, like how they prevent double taxation, particularly on the individual side.They are also discriminatory and tilt the playing field towards small, open, developed economies who spent decades building a DTT network, getting the best rates and are less concerned about protecting their own sourcing… Continue reading

Originally published: June 2022 International law is law too and if countries signed a treaty, it should be binding (pacta sunt servanda). Between the local legal implementation (legislature), application by tax authorities (executive) and possibility of appeal (judiciary), countries have the responsibility design a system that safeguards that countries will keep their word. If they… Continue reading

Originally published: June 2022 Imagine that you spend half a day in your armchair (without doing any research) trying to explain in words how words get meaning and how a listener can understand this meaning. Most likely, your theory will end up being academic and far removed from how language actually operates in practice. Most… Continue reading

Originally published: June 2022 Although treaty interpretation differences may arise from time to time, I would expect these to disappear over time due to converging interpretations. But not everyone agrees that this is a natural and good development. This divergent article argues the contrary point and argues specifically that national courts shouldn’t automatically follow interpretation… Continue reading

Originally published: May 2022 There is a moral jeopardy at the center of tax treaties. As also highlighted in this article by Craig Elliffe (3.3), the main beneficiary for tax treaties are residents of contracting states, not the states themselves. If a country (let’s call it Cazolia) reneges on its obligations under a tax treaty with Suzlia… Continue reading

Originally published: May 2022 William of Ockham (c. 1287-1347, https://lnkd.in/dTu8Sxhf) might well be the most famous medieval philosopher (due to the phrase Occam’s razor), but he is poorly understood. Despite becoming a hero for scientists, his life was more like Umberto Eco’s The Name of A Rose (which was partially inspired by him) and less like… Continue reading

Originally posted: May 2022 The existence of tax treaty shopping is a design flaw of the tax treaty system. Specific anti-tax treaty shopping measures do not really fix that flaw and can make it worse. Countries could be better off sticking to a baseline of source based taxes in treaty negotiations and in most other… Continue reading

Originally posted: February 2022 A lot of recent developments on tax authorities challenging tax treaty benefits of SPVs and they are showing ways these treaty benefits can be denied even without a principal purpose test (PPT). In the Methanex case (Trinidad & Tobago), the tax authorities used general abuse of law principles to claim the… Continue reading

Originally posted: February 2022 Tax treaties have been the very fabric of international tax for over a 100 years. But they are slowly dying. Their death is complicated, triggered by both their success and their shortcomings. On the one hand, tax treaties are spreading everywhere. Every week, new ones are being signed. The ever expanding… Continue reading