Tax Treaty Case Law around the Globe 2025

1. Introduction

This case concerns the interpretation of Art. 4, para. 1 (tie-breaker rules for cases of dual tax residence of individuals) and Art. 15, paras. 1 and 2 (allocating taxing rights between the residence and source states for income from employment) of the tax treaty between Denmark and Portugal. These provisions mirror those stipulated in the OECD Model Convention on Income and Capital (OECD Model Convention).

The case was brought by the claimant, Fátima (the taxpayer), before the Centre for Administrative Arbitration (CAAD) following the dismissal of her administrative appeal against the Portuguese tax authorities. The dispute concerns the legality of tax levied in Portugal on employment income earned in Denmark arising from work performed there and remunerated by a Danish employer. The Portuguese authorities imposed the tax on the grounds that the claimant was a Portuguese tax resident.

The arbitration rules state that taxpayers are the only parties entitled to bring claims against potential unlawful actions by the tax authorities who are subsequently obligated to submit to the arbitration process. The present case involves a sole arbitrator who was appointed due to the...