Access to Treaty Benefits

S. 3601. Introduction

This contribution aims to analyse the limitation on benefit (LoB) clause. In particular, in the first two parts of the thesis, the aim of the research is to clarify the purpose of the LOB clause – why states and the international tax community felt the necessity to introduce this provision into double tax conventions (DTC) – and to highlight, under a historical perspective, the main steps of the process that have led to the enforcement of the LOB clause in both the United States Tax Treaty Model (US Model) and the OECD Model Tax Convention on Income and Capital (OECD Model). In this context, the LoB provision will be discussed having regard to its role in tackling treaty shopping and limiting access to treaty benefits. Moreover, the long path that has led to the current LoB clause is taken into account when analysing and interpreting the purpose of this rule. The third part describes the LoB clause by comparing the US Model and the OECD Model. Finally, the last part explores some critical aspects related to the LoB clause that deserve specific discussion.

2. The purpose of the LoB clause

2.1. Access to tax treaty benefits

When we talk about tax treaties, one of the main...