Preventing Treaty Abuse

I. S. 500Introduction

The concept of beneficial owner is found in Articles 10, 11 and 12 of the OECD Model Tax Convention on Income and on Capital, under the rules on dividends, interest and royalties, respectively. As a complex concept, at first introduced to clarify the words “paid…to a resident” of the paragraph 1 of Article 10 – and at that time intended not to have any technical meaning, the concept of beneficial owner, which was born in a common law context, still gives rise to much discussion, even though it is possible to say that its meaning has been strengthening over the course of time and by the development of laws and decisions at an international level. In every study on this subject though, attention has to be drawn to the difficulties behind the concept, especially regarding its interpretation and its comparison with anti-avoidance rules in both international and domestic contexts. Discussions regarding its nature as anti-avoidance tool or attribution-of-income rule and its extension when falling on the Article 3(2) of the OECD Model are some of the reasons why the beneficial owner concept is still confusing.

Since the first introduction of “beneficial owner” by the OECD in...