The Interpretation of Tax Treaties in Relation to Domestic GAARs by Furuseth Eivind;

Author:Furuseth, Eivind;
Language: eng
Format: epub
Publisher: IBFD Publications USA, Incorporated
Published: 2018-08-15T00:00:00+00:00

Since the Norwegian Ministry of Finance is generally of the opinion that CFC legislation does not conflict with the tax treaty but knows that Belgium takes the opposite position, it is, in the author’s view, strange that the tax treaty and the Norwegian preparatory work on the treaty are silent on this issue. In the author’s view, the fact that the tax treaty does not regulate the applicability of CFC legislation and that Belgium has made a clear statement that it considers CFC legislation contrary to the tax treaty is an argument in favour of saying that Norway may not apply its CFC legislation to entities resident in Belgium. The observation by Belgium may be seen as part of the context of the tax treaty (see VCLT Art. 31(2)) and without a clear wording indicating otherwise the observation by Belgium may be decisive for the question of the applicability of CFC taxation in a tax treaty situation.

Contrarily, it may also be argued that since Norway has not made an observation on the OECD Comm. on the applicability of domestic anti-avoidance rules in a tax treaty situation, and Norway is an OECD member country, Belgium may assume that Norway agrees with the statement in the OECD Comm. Hence, Belgium, in the same way as Norway, should have clarified the question of the applicability of domestic anti-avoidance rules in a tax treaty situation under the treaty negotiation.

In the protocol to the Belgium-Norway (2014) tax treaty, it is highlighted that the contracting states must endeavour to follow the general principles included in the OECD Comm. However, this only applies if one or both of the contracting states has not made an observation expressing disagreement with these principles:

[T]he tax administrations of the Contracting States shall endeavour to follow the general principles of the Commentaries on the Articles of that Model Convention provided the Contracting States did not include in those Commentaries any observations expressing a disagreement with those principles. 331

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