Tax Treaty Case Law around the Globe 2022

3.1. Introduction

This case is the third of a series of decisions involving the relationship between tax treaties and domestic law in the context of corporate residence.

In the first case, the Tax Court of Canada held that the taxpayer was a resident of Canada for domestic law purposes, and rejected the taxpayer’s argument that it was deemed not to be a resident of Canada under the tiebreaker rule in article 4(3) of the Canada-Netherlands Income Tax Treaty (1986) on the grounds that this provision “does not have a direct bearing on this appeal” because it had “already concluded that the [taxpayer] was a resident of Canada for tax purposes”.

In the second case, reported in Tax Treaty Case Law Around the Globe 2020, the Canadian Federal Court of Appeal upheld the lower Court’s conclusion that the taxpayer was a resident of Canada, but referred the case back to the Tax Court on the basis that the Court was required to consider the Canada-Netherlands Income Tax Treaty (1986) because the treaty, if applicable, “would take precedence over the Act”.

S. 20In this case, the Tax Court again concludes that the treaty does not apply, but does so on the basis that the taxpayer failed to adduce ex...