Article 1: Persons Covered

Learning Objectives: You Should:

Be able to understand the scope of the UN and OECD Model Tax Conventions

Chapter I: Scope of the Convention

United Nations Model Double Taxation Convention between Developed and Developing Countries (2017 Update)

Article 1
Persons Covered

This Convention shall apply to persons who are residents of one or both of the Contracting States.
For the purposes of this Convention, income derived by or through an entity or arrangement that is treated as wholly or partly fiscally transparent under the tax law of either Contracting State shall be considered to be income of a resident of a Contracting State but only to the extent that the income is treated, for purposes of taxation by that State, as the income of a resident of that State.
This Convention shall not affect the taxation, by a Contracting State, of its residents except with respect to the benefits granted under [paragraph 3 of Article 7], paragraph 2 of Article 9 and Articles 19, 20, 23 A [23 B], 24 and 25 A [25 B] and 28.

OECD Model Tax Convention on Income and on Capital (2017 Update)

Chapter I: Scope of the Convention

Article 1
Persons Covered

1.This Convention shall apply to persons who are residents of one or both of the Contracting States.

2.For the purposes of this Convention, income derived by or through an entity or arrangement that is treated as wholly or partly fiscally transparent under the tax law of either Contracting State shall be considered to be income of a resident of a Contracting State but only to the extent that the income is treated, for purposes of taxation by that State, as the income of a resident of that State.

3.This Convention shall not affect the taxation, by a Contracting State, of its residents except with respect to the benefits granted under paragraph 3 of Article 7, paragraph 2 of Article 9 and Articles 19, 20, 23 [A] [B], 24, 25 and 28.

Article 1 Bibliography

Arginelli, Paolo, et al, ‘The Royal Bank of Scotland Case: More controversy on the interpretation of the term “beneficial owner” in: Raffaele Russo and Renata Fontana (eds), A Decade of Case Law Essays in honour of the 10th anniversary of the Laiden Adv LLM in International Tax Law (IBFD 2008) https://www.ibfd.org/IBFD-Products/Decade-Case-Law

Avella, Francesco, ‘Recent Tax Jurisprudence on the Concept of Beneficial Ownership for Tax Treaty Purposes’ (2015) 55 Eur Tax 56 https://www.ibfd.org/IBFD-Products/Journal-Articles/European-Taxation/collections/et/html/et_2015_2-3_it_1.html

Avery Jones, John F, ‘The Beneficial Ownership Concept Was Never Necessary in the Model’ in: Michael Lang et al (eds), Beneficial Ownership: Recent Trends (IBFD 2013) https://www.ibfd.org/IBFD-Products/Beneficial-Ownership-Recent-Trends-Review-1

Booker, Thomas, ‘Beneficial Ownership’ (2013) 53 Eur Tax 164 http://pure.au.dk/portal/en/persons/thomas-booker(30ddc578-8593-41a2-b401-91412d13bbe5)/publications/beneficial-ownership(b7867fe0-5627-41c6-a3da-76ca23175ac2)/export.html

Bruno da Silva, "Evolution of the Beneficial Ownership Concept: More Than Half of Century of Uncertainty and What History Can Tell Us" (2017) 12:4 Frontiers of Law in China 501 https://perma.cc/PAQ9-U3YD

Chew, Victor, ‘The Application of Tax Treaties to Collective Investment Vehicles: Beneficial Owner Requirement Explained?’ (2015) 17 Derivatives & Financial Instruments 6 https://www.ibfd.org/IBFD-Products/Journal-Articles/Derivatives-and-Financial-Instruments/collections/dfi/html/dfi_2015_06_int_1.html

da Silva, Bruno. “Granting Tax Treaty Benefits to Collective Investment Vehicles: A Review of the OECD Report and the 2010 Amendments to the Model Tax Convention” (2011) 39:4 Intertax 195 https://www.kluwerlawonline.com/abstract.php?area=Journals&id=TAXI2011022

Dourado, Ana Paula & José Almeida Fernandes. “Portugal: Tax Treaty Case Law on Personal and Substantive Scope” in Michael Lang et al, eds, Tax Treaty Case Law Around the Globe 2013 (Vienna: Linde, 2014) 23 https://www.ibfd.org/IBFD-Products/Tax-Treaty-Case-Law-Around-Globe-2013

Duff, David G, ‘Beneficial Ownership: Recent Trends’ in: Michael Lang et al (eds), Beneficial Ownership: Recent Trends (IBFD 2013) https://www.ibfd.org/IBFD-Products/Beneficial-Ownership-Recent-Trends

Gupta, Ranjana, "Hybrid Entities and Double Tax Agreement Relief: India and New Zealand Approach" (2018) 24 NZJTLP 265 http://www.nzlii.org/nz/journals/AukULawRw/2007/4.pdf

Guttman, Daniel, ‘Beneficial Ownership as Anti-Abuse Provision: The Bank of Scotland Case’ in: Michael Lang et al (eds), Beneficial Ownership: Recent Trends (IBFD 2013) https://www.ibfd.org/IBFD-Products/Beneficial-Ownership-Recent-Trends

Jain, Saurabh, Effectiveness of the Beneficial Ownership Test in Conduit Company Cases (IBFD 2013) https://www.ibfd.org/sites/ibfd.org/files/content/pdf/14_002_effectiveness_beneficial_ownership_final_web.pdf

K. Jain, "OECD - The OECD Model (2017) and Hybrid Entities: Some Opaque Issues and Their Transparent Solutions" (2019) 73:3 Bulletin for International Taxation https://www.ibfd.org/IBFD-Products/Journal-Articles/Bulletin-for-International-Taxation/collections/bit/html/bit_2019_03_o2_4.html

Lang, Michael. “The Personal Scope of a Multilateral Tax Treaty” in Michael Lang et al, eds, Multilateral Tax Treaties: New Developments in International Tax Law (London, UK: Kluwer Law International Ltd, 1998) 119 https://lrus.wolterskluwer.com/store/product/multilateral-tax-treaties/

Lang, Michael et al, Beneficial Ownership: Recent Trends (IBFD 2013) https://www.ibfd.org/IBFD-Products/Beneficial-Ownership-Recent-Trends

Martin Jimenez, Adolfo, ‘Beneficial Ownership as an Attribution-of-Income Rule in Source and Residence Country Perspectives’ in: Michael Lang et al (eds), Beneficial Ownership: Recent Trends (IBFD 2013) https://www.ibfd.org/IBFD-Products/Beneficial-Ownership-Recent-Trends

Petruzzi, R & Holzinger, R, Attribution of Profits to Dependent Agent Permanent Establishments in a Post-BEPS Era https://www.ibfd.org/IBFD-Products/Journal-Articles/World-Tax-Journal/collections/wtj/html/wtj_2017_02_int_2.html

Reimer, Ekkehart, ‘How to Conceptualize Beneficial Ownership’ in: Michael Lang et al (eds), Beneficial Ownership: Recent Trends (IBFD 2013) https://www.ibfd.org/IBFD-Products/Beneficial-Ownership-Recent-Trends

Vallada, Felipe, ‘Beneficial Ownership under Articles 10, 11 and 12 of the 2014 OECD Model Convention’ in: Michael Lang et al (eds), The OECD-Model-Convention and Its Update 2014 (IBFD 2015)

Article 1 Cases

Aiken Industries Inc v Commissioner of Internal Revenue, 5 August 1971, 56 T.C. 925 (United States).

Andre Maximov v United States, 29 April 1963, 63-1 USTC (CCH) 9438 (United States).

Anthony Whitworth Russell v Commissioner of Taxation of Commonwealth of Australia,10 February 2012, [2012] HCA Trans 21 (Australia).

Audiencia Nacional (National Court), 59/2005, 22 January 2009 (Spain).

Bundesverwaltungsgericht (Federal Administrative Court), A-6537/2010, 7 March 2012 (Switzerland).

Bundesfinanzhof (Federal Fiscal Court), I R 234/73, 21 January 1976, Bundessteuerblatt, 1976, II, 15, 513. (Germany).

Bundesfinanzhof (Federal Fiscal Court), I R 74, 88/04, 31 May 2005, Bundessteuerblatt, 2006, II, 118. (Germany).

Bundesfinanzhof (Federal Fiscal Court), IR 89/80, 29 October 1981, Federal Tax Gazette, 1982, II, 150. (Germany).

Bundesgericht/Tribunal fédéral (Federal Supreme Court), A 30/83, 9 November 1984, Archiv für Schwizerisches Abgaberecht, 1985, 54, 1-2, 64 (Switzerland).

Bundesgericht/Tribunal fédéral (Federal Supreme Court), A.87/1980, 1 December 1981, Archiv für Schwizerisches Abgaberecht, 1982, 50, 10, 583 (Switzerland).

Bundesgericht/Tribunal fédéral (Federal Supreme Court), 2A.239/2005, 28 November 2005, Revue de droit administrative et fiscal, 2006, II, 239 (Switzerland).

Commission fédérale de recours en matière de contributions (Federal Tax Appeal Commission), VPB 65.86, 28 February 2001, Steuerrevue, 2002, 30 (Switzerland).

Conseil d’État (Supreme Administrative Court), 144211, 4 april 1997, Revue de Jurisprudence Fiscale, 1997, 5, 424 (France).

Conseil d’État (Supreme Administrative Court), 191191, 13 October 1999 (France).

Conseil d’État (Supreme Administrative Court), 283314, 29 December 2006, Droit fiscal 2007, 87. (France).

Conseil d’État (Supreme Administrative Court), 317024, 11 July 2011 (France).

Corte Suprema di Cassazione (Supreme Court), 4600, 1 March 2009, Diritto e Fiscalita’dell’Assicurazione, 2009, 3, 1095 (Italy).

Del Commercial Properties, Inc v Commissioner of Internal Revenue, 20 December 1999, 78 TCM (CCH) 1183 (United States).

Finanzgericht Nordrhein-Westfalen (Tax Court Nordrhein-Westfalen), VI 452/77 KE, 9 Feburuary 1989, Recht der Internationalen Wirschaft, 1982, 292. (Germany).

Finanzgericht Nordrhein-Westfalen (Tax court Nordrdhein-Westfalen), 2 K 7574/96, 28 December 1998, Entscheidungen der Finanzgerichte, 1999, 320. (Germany).

Hof van Cassatie/Cour de Cassation (Supreme Court), F030006F, 2 December 2004, Tijdschrift voor Fiscaal Recht, 2005, 304 (Belgium).

Hoge Raad der Nederlanden (Supreme Court), 25.451, 28 June 1989, Beslissingen Nederlandse Belasting Rechtspraak, 1990, 45c*. (Netherlands).

Hoge Raad der Nederlander (Supreme Court), 28.638, 6 April 1994, Belissingen Nederlandse Belasting Rechtspraak, 1994, 217c*. (Netherlands).

Hoge Raad der Nederlanden (Supreme Court), 29 084, 23 March 1994, Beslissingen in Belastingzaken, 1994, 192c. (Netherlands).

Indofood International Finance Ltd v JP Morgan Chase Bank NA, London Branch, [2006] STC 192, (2005) 8 ITLR 236 (United Kingdom).

J.J. Grundlingh v Commissioner for the South African Revenue Service,17 September 2009, 69 SATC 159 (South Africa).

Korkein Hallinto-oikeus (Supreme Administrative Court), 2004:12, 6 February 2004 (Finland).

Landsskatteretten (National Tax Tribunal), SKM 2010.729 LSR, 17 November 2010, Tidsskrift for Skatter og Afgifter, 2010, 974 (Denmark).

Landsskatteretten (National Tax Tribunal), 09-00064 / SKM No. 2011.57, 22 December 2010 (Denmark).

Landsskatteretten (National Tax Tribunal), 09-01483, 1 November 2009, Tidsskrift for Skatter og Afgifter, 2010 502 (Denmark).

Landsskatteretten (National Tax Tribunal), 09-03189 / SKM No. 2011.485, 25 May 2011 (Denmark).

Landsskatteretten (National Tax Tribunal), 10-02772 / SKM No. 2012.26, 16 December 2011 (Denmark).

Landsskattereteen (National Tax Tribunal), 11-00210 / SKM2012.409LSR, 31 January 2012 (Denmark).

Mil Investments SA v Her Majesty the Queen, 18 August 2006, [2006] 5 CTC 2252.

Nejvyšší Správní Soud (Supreme Administrative Court), 2 Afs 86/2010-141, 10 June 2011 (Czech Republic).

New York Guangdong Finance Inc v Commission of Internal Revenue, 20 November 2009 (United States).

Østre Landsret (High Course of Eastern Denmark), B-2152-10, 20 December 2011 (Denmark).

Padmore v Inland Revenue Commissioners, 19 May 1989, [1989] STC 493 (United Kingdom).

Pengadilan Pajak (Tax Court), Put-13602/PP/M.I/13/2008 14 March 2008 (Indonesia).

Peter Sommerer v Revenue Agency, 13 July 2012, 2012 FCA 207.

Prévost Car Inc v Her Majesty the Queen, 22 April 2008, 2008 TCC 231.

Resource Capital Fund III LP v. Commissioner of Taxation,26 April 2013, [2013] FCA 363 (Australia).

Superior Tribunal de Justica (Superior Court of Justice), 457.228, 18 March 2004 (Brazil).

Supreme Court, 2010 du 11948m 26 April 2012, (2012) 15 ITLR 1 (South Korea).

Tribunal Administratif (Administrative Tribunal) 18793/19298, 11 July 2005 (Luxembourg).

Tribunal Central Administrativo Sul [Central Administrative Court – South], 6 June 2012, No 05071/11 (Portugal).

Tribunal Central Administrativo Sul [Central Administrative Court – South], 7 October 2012, No 05568/12 (Portugal).

Tribunal Economico Administrativo Central (Administrative Court), RG 1481/2007, 28 September 2009 (Spain).

Tribunal Economico Administravito Central (Central Economic-Administrative Court), RG 6294/1996, 22 September 2000 (Spain).

Tribunal Fiscal de la Federacion (Federal Tax Court), 100(20)33/97/20328/96, 24 February 1998, Revista del Tribunal Fiscal de la Federacion, 1998, 303 (Mexico).

Velcro Canada v The Queen, 24 February 2012, 2012 TCC 57.

Verwaltungsgerichtshof (Supreme Administrative Court), 97/14/0070, 26 July 2000, Österreichishen Steuerzeitung, 2001, 57 (Austria).

Verwaltungsgerichtshof (Supreme Administrative Court), 99/15/0265, 3 August 2000 (Austria).

Verwaltungsgerichtshof (Supreme Administrative Court), 2001/13/0018 and 0019, 10 August 2005 (Austria).

Article 1