The Use of the OECD Commentary
Elgar Tax Law and Practice series
Chapter 12: METHODS FOR ELIMINATION OF DOUBLE TAXATION (ARTT. 23A AND 23B)
Artt. 23A and 23B deal with the so-called juridical double taxation, i.e. that situation in which the same income (or capital) is taxable in the hands of the same person by more than one State. Juridical double taxation is distinguished from economic double taxation, a situation in which two different persons are taxable in respect of the same income (or capital). The Commentary distinguishes three cases of juridical double taxation which are analysed in detail below: a) Dual residence: each CS subjects the same person to tax on his worldwide income or capital (concurrent full liability to tax); b) Residence-source: a person is a resident of a CS (the RC) and derives income from, or owns capital in the other CS (the SC) and both States impose tax on that income or capital (concurrent full liability to tax); c) Source-source: each CS subjects the same person, not being a resident of either CS, to tax on income derived from, or capital owned, in a CS. Case a) is reduced to case b) by virtue of the tie-break rule of Art. 4 because a dual resident person under the domestic laws of the CSs by reason of his domicile, residence, place of management or any other criterion of a similar nature (§ 1 of Art. 4) becomes a resident of either CS as a result of the operation of the criteria of Art. 4 § 2 and 3 (see supra at paras 2.18–2.52 for individuals and paras 2.53–2.70 for companies).
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