Non-Discrimination in European and Tax Treaty Law

I. S. 428Introduction

By virtue of their sovereignty States may levy taxes, which may lead to double or even multiple taxation. The UN Model Tax Convention, for example, notes in its introduction that “the effects of [international double taxation in respect of the same income] are harmful to the exchange of goods and services and to the movements of capital and persons”. The OECD Model Commentary furthermore states that its “harmful effects […] are so well known that it is scarcely necessary to stress the importance of removing the obstacles that double taxation presents to the development of economic relations between countries”. The League of Nations in 1927 recognized that a fundamental principle of international taxation is that “all income would be taxed once and only once.” The prevention of international juridical double taxation can thus be considered the primary purpose of any double tax convention (hereinafter: DTC).

Although States have entered into bilateral double taxation conventions since the nineteenth century, the interaction of domestic tax law and the application of rules adopted in accordance with international standards may still lead to outcomes where certain income ...