Tax Treaty Case Law around the Globe 2023

1. Introduction

The notion of beneficial owner is an important concept in the application of a tax treaty. Following French case law, the notion of beneficial owner allows the tax administration to disregard the application of international tax treaties.

Important decisions rendered by the Conseil d’Etat have shown that the concept of beneficial owner was used negatively to deny the taxpayer the right to benefit from the advantages offered by a double tax treaty.

For instance, the French tax authorities may deny the application of a tax treaty concluded between State A and State B when a recipient established in State B received revenue from State A if the beneficial owner of this revenue is located in State C.

This reasoning had first been adopted in the Diebold Courtage case. In this case, a French company paid royalties to another company based in the Netherlands. According to the French tax authorities, the beneficial owner of these royalty payments was a company based in Switzerland, in particular because the Dutch company had to pay approximately 68% of the French-source revenue to the Swiss company. This reasoning was intended to rule out the application of the tax treaty betwee...