Tax Treaty Case Law around the Globe 2016

S. 373Chapter 32 Netherlands: Triangular Case and Carve-Out Provision under Dutch-Maltese Tax Treaty

Daniël Smit

32.1. Introduction

It is generally recognized that tax treaties are an important tool for the Netherlands to promote transnational trade and investment. This is not only evidenced by the large tax treaty network the Netherlands has and which consists of approximately 100 tax treaties with countries all around the world, but also by the comprehensive tax treaty policy that the Ministry of Finance has developed, the most recent version of which was published in 2011. However, despite the importance of tax treaties, the Netherlands aims at the same time to deny tax treaty protection to taxpayers in cases of tax treaty abuse. Also, the Netherlands aims at denying, in part or in full, tax treaty protection to persons who are subject to a privileged tax regime for certain items of income in their state of residence. The precise design of these so-called “carve-out” provisions may differ from treaty to treaty.

In the case at hand, the interpretation of the carve-out provision under article 30 of the Dutch-Maltese tax treaty (hereinafter also referred to as “the Treaty”) is at stake. The ...