It has often been observed that tax treaties are not there to help residents of either country to pay less tax, but to divide the tax take between the governments of the two countries. There can nevertheless be some asymmetrical situations – where a resident of country A has income arising in country B and the treaty gives him a tax exemption or lower rate of tax in country B, while country A does not charge tax on that income – either because country A does not tax it (think companies in the UAE or trusts in New Zealand) or because the tax liability in country A is reduced or eliminated by base erosion (think the classic royalty “stepping stone” in the Netherlands). The search for such asymmetry is sometimes known by the rather disparaging term “treaty shopping”.
It is hardly surprising that this topic will be encountered frequently in the records of an association devoted to international tax planning. And, yes – it featured in the very first meeting of the association, in Amsterdam in 1975, under the title of “Special Situations in Double Tax Relief” (with an early reference to the Swiss partnership and the Stepping Stone. The international tax treaty network has grown hugely since then, and coming closer to the present day, we find, in 2009, Mario Petriccione discussing anti-avoidance provisions in tax treaties in Monte-Carlo. At the same meeting Jan Tiesema discussed licensing through the Netherlands, and later that year, in Zurich, Howard Rosen talked about international leasing – both of which depend for their effectiveness on relieving provisions in the relevant treaties. And last year, in Cannes, the treaties with Singapore came under scrutiny from Pieter de Ridder and those with Hong Kong were examined by Kishore Sakhrani.
In the intervening three decades, we have had talks on various aspects of treaties and treaty shopping, by – among others – Erich Baier, Philip Baker, Charles Cain, Chrysses Demetriades, Stephen Gray, Charles Haccius, Marshall Langer, Howard Levine, Anthony Murty, Richard Pease, Iqbal Rajahbalee, Roy Saunders, Gabor Szabo, Robert Venables and Emily Yiolitis. And on June 11th, in Monte-Carlo, we shall hear Niklas Schmidt talk about Immovable Property and Double Taxation Treaties.