Tax Treaty Case Law around the Globe 2025

1. Introduction

Bruyea is an interesting case that addresses a relatively minor doctrinal matter of whether an idiosyncratic United States income tax may be offset by treaty-based foreign tax credits not provided by the domestic law that imposes that tax. This issue arose a few times in recent years, and various courts reached different conclusions. It is possible that the matter will therefore soon reach the Supreme Court; various appeals of first-instance courtsʼ decisions are under consideration in the meantime.

The broader implications of the case, however, may be wide-ranging. To begin with, there is the fundamental question of whether a treaty may provide foreign tax credits independently from domestic law provisions in the United States. This is an issue that is somewhat unique to the country because it alone provides foreign tax credits unilaterally to taxpayers and does not require reciprocity like in most other states. Relieving double taxation with foreign tax credits in the United States is therefore not primarily treaty based but rather majorly (or solely if the government won the day on this matter) domestic law based. Bruyea and its accompanying cases will have to fina...