Tax Treaty Case Law around the Globe 2021

S. 162I. Introduction

It is no secret that beneficial ownership is one the most controversial concepts in international taxation, in part due to the changes in position of the OECD Commentaries on its meaning over the years. The Colgate judgment of the Spanish Supreme Court of 23 September 2020 (rec. 1196/2020) is yet another controversial judicial decision on such a concept; this time (against the mainstream position), it concludes that the term is not implicit in a DTC that follows the Draft OECD MC (1963). The relevant facts and lower court decision are explained in section 2 and the Supreme Court decision in section 3. In section 4, some critical comments on the decisions are added. As commented below, the decision is weak and could have been better reasoned, has not really closed the controversy in Spain on the broad or narrow meaning of beneficial owner (courts in Spain interpret that beneficial owner has a meaning and effect similar to a GAAR), and probably will not be the last time in Spain that the Supreme Court or lower courts will have to take decisions on beneficial ownership.

II. Facts of the Case

As a consequence of the restructuring in 2005 of the US Colgate group to operate ...