The relationship between treaties and domestic tax law ought to be straightforward. The pacta servanda sunt principle expressed in articles 26 and 27 of the Vienna Convention on the Law of Treaties itself implies that treaty obligations must be upheld notwithstanding domestic law. A variety of constitutional arrangements around the world mean that there is…

Analysis of the ECJ judgments, reading by national courts, and impact on tax treaty practice Authors: Robert Danon,[1] Daniel Gutmann,[2] Margriet Lukkien,[3] Guglielmo Maisto,[4] Adolfo Martín Jiménez,[5] Benjamin Malek[6]   (Forthcoming: Intertax, vol. 49, 2021, issue 6/7) Since they were delivered in 2019, the judgments of the ECJ in the Danish cases have been widely…

When the UK introduced its diverted profits tax, I was telephoned by a lawyer at the US Treasury. He wanted to know whether the “just and reasonable” apportionment of profits, in certain circumstances where DPT applied, was a new development? What did it mean? I was reminded of that discussion this week as a result…

Case law on thepurpose of transactions is starting to develop around the world. Is there a common pattern? Whether a financing structure was a “tax avoidance arrangement”  under  now repealed general anti-avoidance provisions of the New Zealand Income Tax Act 2004  was examined last month by the New Zealand Court of Appeal in Commissioner of…

Inspiration, purpose and the context of this contribution In the article “The PPT in Post-BEPS Tax Treaty Law: It Is a GAAR but Just a GAAR!”, Professor Robert Danon convincingly demonstrated that “while the PPT certainly permits a purposive interpretation, it may not be used to build into tax treaty law additional requirements that were…

In last month’s blog I promised to address the treaty aspects of  Davies and Others v HMRC [2020] UKUT 67 (TCC). The case concerned UK resident individuals who each took out a life insurance policy with a Bermuda insurer under which their entitlements were linked to a Mauritian company that developed land in the UK….

We have all become familiar with the expression in the PPT set out in article 7(1) of the MLI and article 29(9) of the 2017 OECD Model  where “obtaining that benefit was one of the principal purposes of any arrangement or transaction”.  Discerning which is a principal purpose is one of the main challenges in…

Many States have incorporated General Anti-Avoidance Rules (GAARs) into their tax laws to prevent tax avoidance; within the EU, a GAAR is even mandatory for corporate taxation since 1 January 2019 (Article 6 of the EU Anti-Tax Avoidance Directive (EU ATAD)). States are recommended in the OECD Model Tax Convention on Income and Capital to…

The Canadian Federal Court of Appeal has upheld the Tax Court of Canada decision in Canada v. Alta Energy Luxembourg S.A.R.L., 2020 FCA 43 (CanLII).   The case is of some significance because the Canadian Revenue Agency (“CRA”) sought to apply the Canadian domestic general anti-avoidance rule (GAAR) in order to deny treaty relief. The…

India recently notified a Protocol that amends the India-China tax treaty and incorporates some of the OECD recommendations put forth as part of its BEPS project. The changes would apply from the 2020 financial year. The Protocol brings about serious changes to the tax treaty in several areas, including limiting treaty abuse, tackling artificial avoidance…

Background Action 6 of BEPS introduced the principal purpose test (PPT) as one of the Minimum Standards to be implemented by the countries/jurisdictions taking part in the BEPS Inclusive Framework (IF). The PPT has been also introduced in the Multilateral Instrument (MLI), in force since 1 July 2018. Even though the choice given to countries…

BEPS Action Plan 6 observes that corporations are misusing Double Taxation Avoidance Agreement (DTAA) provisions by indulging in treaty shopping. A typical example of treaty abuse that BEPS Action Plan 6 seeks to counter is that of an American corporation entering the Indian market through Mauritius because of the favourable India-Mauritius DTAA. An intermediary mailbox…

In 1789, Benjamin Franklin wrote in a letter to French scientist Jean-Baptiste Leroy: “Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.” Franklin was right then and he is right now. However, there is one more commonality…

The text represents the personal views of the author, which do not purport to represent the view of Poland’s Ministry of Finance. In the judgement in X GmbH (Case C-135/17), on 26 February 2019, the CJEU for the first time examined a compatibility of CFC rules with the EU primary law to the extent of…