A service provided by the WU Library and the WU IT-Services

Conduit Companies, Beneficial Ownership, and the Test of Substantive Business Activity in Claims for Relief under Double Tax Treaties

Jain, Saurabh and Prebble, John and Bunting, Christina (2014) Conduit Companies, Beneficial Ownership, and the Test of Substantive Business Activity in Claims for Relief under Double Tax Treaties. WU International Taxation Research Paper Series, 2014-11. WU Vienna University of Economics and Business, Universität Wien, Vienna.

[img]
Preview
PDF
Download (937Kb) | Preview

Abstract

If interpreted in a strict legal sense, beneficial ownership rules in tax treaties would have no effect on conduit companies because companies at law own their property and income beneficially. Conversely, a company can never own anything in a substantive sense because economically a company is no more than a congeries of arrangements that represents the people behind it. Faced with these contradictory considerations, people have adopted surrogate tests that they attempt to employ in place of the treaty test of beneficial ownership. An example is that treaty benefits should be limited to companies that are both resident in the states that are parties to the treaty and that carry on substantive business activity. The test is inherently illogical. The origins of the substantive business activity test appear to lie in analogies drawn with straw company and base company cases. Because there is no necessary relationship between ownership and activity, the test of substantive business activity can never provide a coherent surrogate for the test of beneficial ownership. The article finishes with a Coda that summarises suggestions for reform to be made in work that is to follow. (authors' abstract)

Item Type: Paper
Additional Information: Editors: Eva Eberhartinger, Michael Lang, Rupert Sausgruber and Martin Zagler (Vienna University of Economics and Business), and Erich Kirchler (University of Vienna)
Keywords: Steuerrecht International / Doppelbesteuerungsabkommen / Nutznießung / Zweckgesellschaft
Classification Codes: RVK QL 530, PP 8080
Divisions: Departments > Öffentliches Recht und Steuerrecht > Österr. u. Europ. Öffentl. Recht
Depositing User: ePub Administrator
Date Deposited: 30 Sep 2014 12:58
Last Modified: 04 Nov 2014 09:59
URI: http://epub.wu.ac.at/id/eprint/4309

Actions

View Item