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The Meaning of 'Beneficial Ownership' in Double Tax Agreements

British Tax Review, No. 3, 2009

31 Pages Posted: 24 Nov 2009  

Craig Elliffe

University of Auckland - Faculty of Law

Date Written: November 24, 2009


This article considers the significance of the term "beneficial ownership" in Articles 10, 11 and 12 of the OECD Model Double Tax Convention (“the Model”), and looks at features of commonly used cross-border structures (structured finance and holding companies) by way of practical background to the question of how significant this issue is in international tax structures.

The ability for a multinational to successfully insert a resident of a more favourable Double Tax Treaty, between the country of the source of income and the ultimate recipient depends, inter alia, on the question of whether the interposed entity can be said to be the “beneficial owner” of the income.

In seeking to find a meaning for the term "beneficial ownership" the article considers:
a) the approach of New Zealand Courts (as an example of a common law country) to the interpretation of Double Tax Conventions and the reliance upon the Vienna Convention,
b) the use, under Article 3(2) of the Model, of either a domestic meaning or autonomous international meaning for the term, and weighs up the relative merits of each approach,
c) analyses three recent UK, French and Canadian cases and their decision, both on the issue referred to above in b) and on their conclusions as to the meaning of the term, and
d) lastly, predicts what a New Zealand Court will decide on the meaning of the term, having regard to the treaty, statutory and case law position (both NZ and foreign), including the question of whether there is a difference between tightly structured financing transactions (interest) and holding companies (dividends).

Keywords: Beneficial ownership, Double Tax agreements, Articles 10,11, and 12, Article 3(2)

JEL Classification: K33, K34

Suggested Citation

Elliffe, Craig, The Meaning of 'Beneficial Ownership' in Double Tax Agreements (November 24, 2009). British Tax Review, No. 3, 2009. Available at SSRN:

Craig Macfarlane Elliffe (Contact Author)

University of Auckland - Faculty of Law ( email )

Private Bag 92019
Auckland Mail Centre
Auckland, 1142
New Zealand

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