Tax Treaty Case Law around the Globe 2025

1. Introduction

The Turkish double tax agreement (DTA) network includes 93 tax treaties in force in which the concept of “beneficial ownership” is included in all of them except the Netherlands tax treaty. Despite such a widespread use of it, judicial decisions are very few with one of the rare ones being from the Supreme Administrative Court 3^rd Chamber, no. E.2023/8701, K.2024/3170 dated 21 May 2024. It relates to dividend article application of the Ireland-Türkiye DTA.

2. Facts of the case

Case no. E.2023/8701, K.2024/3170 involves a Turkish resident company in the energy sector that withheld the lower 5% income withholding tax rate regulated under the relevant tax treaty applicable on the dividends distributed to its parent company resident in Ireland. The tax administration, however, asserted that the parent company was a shell company and was thus not the beneficial owner of the distributed dividends and rejected the application of the lower rate provided in Art. 10 of the tax treaty on dividends. The tax administration accordingly assessed the income withholding tax at a rate of 15%.

S. 320The Turkish company filed a case against the tax administration’s decision asserting that fulfil...