Tax Treaty Case Law around the Globe 2015

I. S. 246Introduction

The Judgment commented in this chapter raises very interesting issues regarding two main topics: (1) whether tax treaties should apply to taxpayers who are only subject to tax on income from sources within the state of residence; (2) the effects of the OECD 2005-2014 Commentaries on Article 15 and Article 23 of the OECD Model Convention on stock options, and the specific theory on the function of tax treaties they represent, especially when applied to tax treaties concluded before those Commentaries were published.

II. Facts of the case

A worker of a US parent company was seconded to the Spanish subsidiary of the group and arrived in Spain on 24 January 2005. On that date, he commenced employment for the Spanish subsidiary. He applied for the Spanish special tax regime for “inpatriate workers” and his application was approved on 25 August 2005. Under this regime, persons acquiring tax residence in Spain can opt to be taxed according to the personal income tax law or the non-resident income tax law in the tax year they have taken up their tax residence in Spain and for the ensuing five years. The main advantage of this regime is that only income from Spanish sources, as...