Tax Treaty Case Law around the Globe 2019
1. Aufl. 2020
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S. 3501. Introduction
The 2018 case in the Starr International saga of cases focuses on a fundamental question concerning tax treaty interpretation by courts: to what extent may courts intervene in the executive role under tax treaties when it seeks also to interpret them. The context is the limitation-on-benefits article’s discretionary benefits provision, typical to US tax treaties, a provision that requires consultation with the “other” competent authority prior to a decision on such discretionary relief. The case further highlights interesting aspects of the interaction between the treaty anti-avoidance rules, the limitation-on-benefits and principal purpose tests.
2. Facts of the Case
Starr International Company, Inc. (“Starr International”) was a privately held parent company to multiple international insurance and financial businesses. It was originally founded in Panama as an insurance company by a Mr. Vander Starr who also founded the American International Group (“AIG”), the shares of which came eventually to be Starr International’s primary asset, after various restructurings. The basic capital structure was of two types of shares: low value voting shares held by individuals, pri...