Tax Treaty Case Law around the Globe 2018

S. 17Chapter 3 Brazil: Personal Scope in Brazilian Tax Treaties: Treaty Shopping

Luís Eduardo Schoueri and Guilherme Galdino

3.1. Introduction

The concern about treaty shopping is not new. Domestic rules, tax treaty provisions and different interpretations have already been developed to prevent treaty shopping. At present, the OECD’s “BEPS Action Plan identifies treaty abuse, and in particular treaty shopping, as one of the most important sources of BEPS concerns”, and Action 6 of the BEPS report includes treaty provisions and a new preamble designed to prevent such treaty abuse, and to clarify that the purpose of tax treaties is to prevent the generation of double non-taxation. Given such emphasis on the prevention of treaty abuse, Action 6 has been adopted as the minimum standard, along with other actions for the implementation of the BEPS package.

The treaty provisions in Action 6 may be implemented through (re)negotiation or the Multilateral Instrument. The idea being that if a contracting state wishes to address the practice of treaty shopping, the state may conclude a tax treaty with another contracting state and include a provision aimed at preventing it. Otherwise, preventing treaty...