Introduction to the Law of Double Taxation Conventions

S. 396. The structure and system of DTCs

6.1. Applying the convention

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The structures and systems of all DTCs show similarities. Tax treaties usually contain rules relating to the personal and substantive scope. The allocation of taxing rights over the persons and taxes covered is dealt with in one of the allocation rules. The avoidance of double taxation is almost always dealt with in the method article. Other provisions supplement the treaties.

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Insofar as the treaty follows the OECD Model, the personal scope of a DTC is established by Art. 1 and Art. 4 (cf. m.no. 177 et seq.). Under Art. 1 OECD Model, the convention is applicable to persons who are residents of one or both contracting states. According to Art. 3(1) OECD Model, a person includes an individual, a company and any other body of persons. However, a PE is not regarded as being a person. Under Art. 4(1) OECD Model, any person who, under the laws of that state, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature, is considered a “resident of a Contracting State”. Persons who are liable to tax in that state in respect only of income from sources in that stat...