Judicial Interpretation of Tax Treaties

Judicial Interpretation of Tax Treaties

The Use of the OECD Commentary

Elgar Tax Law and Practice series

Carlo Garbarino

Judicial Interpretation of Tax Treaties is a detailed analytical guide to the interpretation of tax treaties at the national level. The book focuses on how domestic courts interpret and apply the OECD Commentary to OECD Model Tax Convention on Income and on Capital. Adopting a global perspective, the book gives a systematic presentation of the main interpretive proposals put forward by the OECD Commentary, and analyses selected cases decided in domestic tax systems in order to assess whether and how such solutions are adopted through national judicial process, and indeed which of these are of most practical value. The book operates on two levels: firstly it sets out a clear and comprehensive framework of tax treaty law, which will be an important tool for any tax practitioner. Secondly, the book provides crucial guidance on issues of tax treaty law as applied at domestic level, such as investment or business income, dispute resolution and administrative cooperation.


Carlo Garbarino

Subjects: law - academic, tax law and fiscal policy


A ‘dividend’ is a distribution of profits to shareholders by: ‘corporations’; companies limited by shares; limited partnerships with share capital; limited liability companies; and by other joint stock companies. Such legal entities with a separate juridical personality distinct from their shareholders differ from partnerships (which do not have juridical personality). In fact, in respect of profits of a business carried on by a partnership, a partner is taxed personally on her/his share of partnership capital and partnership profits, while in respect of profits of a business carried on by a corporation, a shareholder is taxable only on those profits distributed by the company. Art. 10 § 1 does not prescribe the principle of taxation of dividends either exclusively in the RC (State of the beneficiary’s residence) or in the SC (the CS where the payer of the dividends is resident). Exclusive allocation of taxing rights in the RC, notes the Commentary, is not feasible as a general rule; moreover it would be unrealistic to suppose that all taxation of dividends at source be relinquished. By contrast, exclusive taxation of dividends in the SC would not be acceptable as a general rule because some States do not tax dividends at source and all States tax residents in respect of dividends they receive from non-resident companies. So Art. 10 § 1 introduces concurrent taxation in the RC and the SC and provides that dividends may be taxed in the RC. The Commentary notes that the term ‘dividends paid ’ used by Art.

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