The Relevance of the Beneficial Ownership Concept in Tax Treaty Clauses That Do Not Include It in Their Wording: A Note on the Colgate-Palmolive Case

Abstract

This case note analyzes the outcome of the Spanish Colgate-Palmolive case, decided by the Supreme Court in September 2020. The case revolved around the interpretation of Article 12 of the Spain-Switzerland tax treaty (1967), on royalties, which omits any reference to the beneficial owner of the income in its wording. In short, the Court considered that the beneficial ownership concept cannot be construed by resorting to the OECD Commentaries, because soft law documentation cannot supersede the content of an applicable tax treaty.

Keywords: Tax Treaty, Double Tax Convention, Beneficial Ownership, Royalties, Switzerland, Spain, OECD Commentaries, Soft Law, Interpretation

JEL Classification: H20, H87, F23, K33, K34