The OECD-Model-Convention and its Update 2014

I. S. 209Introduction

In today’s globalized world cross-border business activities and transactions abound. The income from such activities can be taxed in more than one country, thus leading to a possibility of double taxation. In order to prevent this, countries have established a substantial network of bilateral treaties. To make this network more effective and more easily applicable, international organizations such as the OECD and the UN have made an effort to harmonize the treaties by drafting model tax conventions which form the basis of negotiations between the contracting parties. While the OECD Model Convention (OECD Model) is still the prevailing model, the UN Model Convention (UN Model) is becoming increasingly important, as more and more developing countries establish a treaty network. The economic boom in many developing countries has led to an increased awareness of the importance of tax treaties.

While the UN Model follows the same structure and uses the same terminology as the OECD Model, it has a number of particularities which take into account the needs of developing countries. This is mainly resolved by allocating more taxing rights to the source state than is the case...