The OECD-Model-Convention and its Update 2014

I. S. 26Introduction

A. History

The concept of beneficial ownership has been used extensively by tax legislation in Australia, Canada and the United Kingdom for a long time in a domestic context, usually addressing implied covenants given regarding the sale of land in English law. Although a distinction could be made between a beneficial legal owner and a non-beneficial legal owner, there was no discussion related to the beneficiary’s interest. Several questions arise in this context, including whether this non-beneficial ownership by a bare trustee, e.g. could be considered ownership to start with. However, there are too many variants – such as companies in liquidation or an overly detailed trust discussion – that are rather complex issues the discussion of which is beyond the scope of this chapter, and consequently will not be focused upon.

Beneficially ownership was addressed in 1942 by the Canada-United States income tax treaty, but still referring to the beneficial ownership of shares of a company and allowing for some tax relief for “real” subsidiaries. The exchange of information provision in this 1942 treaty also used the concept of beneficial ownership, this time to provide treaty...