The Use of the OECD Commentary
Elgar Tax Law and Practice series
Chapter 2: RESIDENCE FOR TREATY PURPOSES (ART. 4)
The treaty’s personal scope of application is to relieve double taxation from double residence, not only double taxation from taxation in the RC and in the SC, and therefore Art. 4 defines the meaning of the term ‘resident of a CS’ and solves cases of double residence which may be created by the domestic laws of States which impose ‘full tax liability’ based on the taxpayers’ personal attachment to the RC. In respect to individuals the definition of a resident covers various forms of personal attachment to a State. According to Art. 4 § 1 the term ‘resident of a CS’ includes any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature, as well as government of each State or political subdivision or local authority thereof. Art. 4 § 2 however, provides that the term ‘resident of a CS’, does not include any person who is liable to tax in RC in respect only of income from sources in the RC or capital situated therein. Pension funds, charities and other organizations may be exempted from tax, only if they meet all of the requirements for exemption specified in domestic laws. National Courts have addressed situations in which the issue was whether a taxpayer was effectively liable to tax and therefore entitled to the benefits of the treaty. For example, in TD Securities, a Canadian case, US-Par, a company
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