Tax Treaty Case Law around the Globe 2024

11.1. Introduction

Under article 10(2), 2017 of the OECD Model Tax Convention and other relevant tax treaties, two types of treaty-lowered ceiling tax rate for dividends distribution from a corporation in one country to the shareholder(s) in another country are provided. One is a tax rate for portfolio dividends distribution and the other is for so-called parent/subsidiary dividends distribution. Normally, the latter tax rate is lower than the former because of corporate-shareholder integration, in addition to the allocation of taxing power between the treaty-concluding countries. Some treaties adopt such parent/subsidiary tax rate with simple holding proportion requirements; other treaties, in addition to such holding proportion requirements, adopt an additional requirement of a holding period. In the latter case, without meeting such second requirement, no parent/subsidiary distribution could enjoy such treaty lowered reduced rate of tax. However, there might be some varieties among the holding period requirements and how to count the periods under su...