Tax Treaty Interpretation (LAWS90132)

Tax treaties are an important aspect of the international tax system and an in-depth understanding of them is crucial for the modern international tax practitioner or administrator. Using a series of case studies, this subject will explore complex issues involving the interpretation and application of tax treaty provisions. Students will be required to analyse the application of key provisions to common scenarios faced by multinational companies and tax administrations. The subject will also cover important features of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting.

The subject will be presented by Professor Carlo Garbarino of Bocconi University, author of “Judicial Interpretation of Tax Treaties – The Use of the OECD Commentary” (Elgar, 2016).

This subject provides and in-depth examination of the significant cases from around the world on tax treaty interpretation.

Principal topics that will be addressed during the subject include:

• Introduction to tax treaty judicial interpretation
• Scope of tax treaties, particularly the concept of ‘beneficial owner’
• Permanent establishment
• Business profits and associated enterprises
• Income from immovable property, capital gains and capital
• Income from equity and debt
• Royalties
• Non-discrimination (comparison with European Court of Justice tax cases).

The subject will also cover salient aspects of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting. This was one of the outcomes of the OECD/G20 project to tackle base erosion and profit shifting (the 'BEPS Project'), i.e. tax planning strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations where there is little or no economic activity, resulting in little or no overall corporate tax being paid.

This is an advanced subject on tax treaty interpretation and judicial applications of tax treaties. Discussion of each topic will be facilitated by the subject coordinator, followed by students’ presentations of leading cases.