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


The principle adopted by Art. 24 is that discrimination on the grounds of nationality is forbidden: nationals of the RC may not be treated less favourably, i.e. a ‘more burdensome’ tax treatment cannot be imposed in the SC on nationals of the RC if they are in the ‘same circumstances’. This principle is typically applied in inbound situations, in which it protects nationals vs non-nationals in the SC. For example, in a Spanish case, Spain applied a limitation period for the refund of withholding tax on non-residents that differed from the limitation period for residents. The Court held that this was in conflict with the non-discrimination article. By contrast, when the non-discrimination principle is applied in outbound situations it protects nationals of the RC operating in the RC versus nationals of the RC operating in the SC. There is a rather limited judicial application of this outbound non-discrimination, except for cases that attribute to PEs of foreign companies with foreign income (treated as notionally resident of the SC) the same benefits enjoyed by companies resident of the same country of the PEs and having foreign income. For details see infra at 13.84–13.92. The principle of non-discrimination of Art. 24 is not meant to have the far-reaching application afforded by other clauses of equal treatment found in international law (MFN clause in theWTO) or in EU law (Art. 18 of the EU Treaty), so the essential feature of this treaty clause is what it does not achieve,

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