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


Art. 21 has a simple structure as it consists of just an allocation rule (Art. 21 § 1) and a rule on the force of attraction on other income effectively connected to a PE (Art. 21 § 2), but has two essential dimensions that attribute to Art. 21 a central role in the structure of the Model: the ‘other income’ dimension, and the third-country dimension. The first essential dimension is that Art. 21 plays a residual role in respect of all the other classes of income and focuses on the so-called ‘other income’ (i.e. income ‘other than’ that falling in other treaty rules): by taxing the other income Art. 21 fills gaps in the structure of the treaty but does not create new taxable situations. The second essential dimension is that Art. 21 is the only treaty rule that deals expressly with income sourced in third countries (i.e. countries that are neither the RC nor the SC bound by a specific bilateral treaty). The combination of these two essential dimensions of Art. 21 provides a matrix in which the analysis of Art. 21 is divided into two main parts: first, the analysis of other income ‘not dealt with by other articles of the treaty’, i.e. sourced in the SC (see infra at paras 11.07–11.51); and second, the analysis of other income ‘from sources not expressly mentioned’, i.e. sourced in third countries (see infra at paras 11.52–11.61). In turn, each of these two main parts is divided in two sub-parts,

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