International and European Tax Law Summary Part 2 / 4

t.ecteere4-lmerpretationottaxtreah.es
llethoasotlnlerpretation

MTeleologi.ca/interpretation--
purpose of a tax

nudge behavior
1
generate revenue
, ,
. . .




HGrammah.ca/--
of the provision
wording

3)
Historical
historical development of provision, changes in
a
wording orpurpose
=




4)
systematical
See the law in its
position within the treaty; its
=

scope ; meaning


5)
Comparison
=



compare to other States /DTT




Problemsotlhlerpretation
→
Treaties are not a law assuch

a law is enacted
by a
legislator ,
whereas the Treaty is a
signed contract of two parties
1
depends on domestic law of the CS
,
whether the
Treaty is considered to be a lawandprevails over domestic law
↳
monoistic Ct)
system :




↳ dualistic
system Treaty is Treaty is on the same level
H
:
,
a contract which needs to be implemented into dom law
.


;
as



domestic law
;
no
hierarchy

stneinlentionofthepam.es#
Divorcing
starting point to determine the intention OHhe Parties
=




? acc to some dom laws the intention or purpose of the
. .



you
can
go beyond
the
wording ifyou can prove that
,



law can (
be different than the
wording take historical background into account)


Dimension !
?
Wording t intention

↳
circumventing the intention of the tax Treaty by sticking to the exact
wording
?since DTTare should
negotiated contracts ,
there be
meeting minutes
1no!Would restrict
free opinion exChang

, 37commentan.es
provideguidance on how to interpret the provisions
-




? not
binding

4)
domestica
AA 312 )
only if no definition within
treaty
-


.




Applicabkkalesandpnha.pl#1)lhKrnationalPUblicLaw
civiennaconvention
⇒ AA 31
.
-
33



recognizedinternational costumany law
-




binding for all MS and Non Ms
-
-




conflict between intention x wording notall &
be solved
by wording only tax meaning day use goodfaith
-




to ⇒
,




wording has priority over intention

it
prohibition to use
testimony/intention of the CS
; bilingualand multilingual agrmts are equally binding isin case of discrepancies
.




(
otherwise Treaties won'tfunction
properly if interpretation diHers between Cs)
, choose the one that reconciles all texts the best




blstataleotlntemationalcoun-otfastia-D.TT
don't need to be taken to KF, because their rules are self executing
-




-


DITprotect Taxpayer directly andprovides him with the
ability toclaim rightsprovidedin front of domestic court

A domestic court will have to decide like the Icf :




⇒ AA
. 38 of Statute of ICF applicable .

.




A court is
obligedto take international conventions

into account




C)
Domestica
some countries have specific rules on how to interpret
-




international conventions fti Canada) .
.




-



some have unwritten rules for interpretation A.i. France )
-


some have specific rules on tax law interpretation

It i.. indoubt of interpretation infavor of the TP



general
domestic
principles
-




Ilerent
di possibilities ofjudges in di
H countries
-

.




dlprinapleotcommoninterpretation
CS supposed to
find commongroundfor interpretation of Treaties
-




take and
into account the courts decisionsof the otherCS,
foreign law foreign foreign
'
scholars court decisions
-




,

a limited to Inot
language binding

, e) Tax Treaties
¥ih0nswithin the Treaties CAA . 3-5)

domestic law CAA 3121 6 ,
references to )
-
- . .
.



,



3121
general interpretation
rule AA
-

.




reference to
commentary
-




HAA.to/2)OECDMTC-
④when does the context require otherwise ?

some : domestic law to
approachfirst
others dom law as last resort
:

.




which States law to ?
apply
→ :



-


OECD approach: HA 23 shows that, when the otherstate
.
has taxed in accordance with the Treaty we will avoid Double

Taxation
by credit/exemption and therefore, the R State is bound
-




by the decision of interpretationofthe
SState
-




A case law shows that almost
nobodyfollows




glhutuaetgreeme.ms?DTT are not
binding for courts 1 not ratified or transferred into domestic law
;
lower rank
,
override
through
court decision possible




Quaciticationconfcicts
Qualification of income of source state binding for Residence State R State must provide
-




is
relief
→ -




1 AA 23
para 32.1 Ot
-



.




2
difference in domestic law
para .
32.3 of AA 23 -




Qualification of source state is not
binding if
-


'
,




}para
different interpretation of facts
°

32
so
. .




H interror of treat
di
Z provisions
.
.




-




Double Non
-
-

taxation AA 23141para
.
.
32.6 t 32 -
t →
not applicable if S State
applies DTC and concludes
-




that it State K has to
may tax :




avoid DT even if States doesnt
,


tax
-



applicable , ifStates exempts or

does not WHT
UY