Beneficial Ownership: What Does History (and Maybe Policy) Tell Us

55 Pages Posted: 10 Sep 2012

See all articles by Richard J. Vann

Richard J. Vann

The University of Sydney Law School

Date Written: September 9, 2012


The purpose of this paper is to provide a history of the use of beneficial owner and related terms such as beneficiary in tax treaties, including developments in international organisations, and to discuss the policies driving the usage. It is suggested that a number of differing policies possibly underlie the early usage, including the fact that income is received by a nominee. It is further suggested that the specific term “beneficial ownership” had a number of different purposes which should be distinguished and which only in one brief and now discontinued usage dealt with the use of interposed entities such as holding (conduit) companies.

In the light of that history the paper briefly analyses the OECD 2011 discussion draft on beneficial ownership. It is suggested that the draft goes beyond the original purpose and sensible policy (given the range of other options to deal with treaty abuse in a more appropriate manner). The approach of the draft and of the earlier 2002-2003 work is already increasingly reflected in the growth of litigation on the issue (not considered in the paper) which is the tip of the iceberg of the discretionary use of beneficial ownership by tax administrations to deny treaty benefits when it suits them. The result is increasing uncertainty about the availability of treaty benefits which will not advance the cause of international trade and investment, nor provide a sensible response to treaty abuse.

Keywords: beneficial owner, tax treaties, international taxation, history

JEL Classification: K10, K30, K33, K34

Suggested Citation

Vann, Richard J., Beneficial Ownership: What Does History (and Maybe Policy) Tell Us (September 9, 2012). Sydney Law School Research Paper No. 12/66, Available at SSRN:

Richard J. Vann (Contact Author)

The University of Sydney Law School ( email )

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The University of Sydney
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