Tax Treaty Case Law around the Globe 2021

S. 108I. Introduction

This chapter refers to the Supreme Court of Spain judgement 308/2020, 3 March 2020, rec. 5448/2018, the so called “Stryker case”. As will be shown, this is a case on tax treaty interpretation, in particular, on whether later Commentaries to the OECD MC can be used to interpret a previous tax treaty that was entered into before those Commentaries were released. However, this is not a case about the “dynamic versus static” use of the OECD Commentaries. Rather, it is a decision (with a somewhat inaccurate argumentation) showing that the tax administration tried to use later OECD Commentaries to reach a conclusion that did not find any support in the text of the applicable tax treaty. In sum, it is a case in which the Supreme Court limited the “creative” or “arbitrary” use by the Spanish tax administration of later Commentaries to disregard the wording of the previous tax treaty.

Stryker is also a case on permanent establishments, however, as it will be explained, this aspect of the case is less valuable since, having had the opportunity to have a say on whether the changes in the 1977 Commentary to the negative PE provision of the OCDE MC (Article 5(4)) really added some...