Professor Robert Danon publishes an article on The PPT in Post-BEPS Tax Treaty Law: It Is a GAAR but Just a GAAR! in the IBFD Bulletin for International Taxation

In this article, Professor Robert Danon discusses the principal purpose test (PPT) included in article 29(9) of the OECD and UN Models (2017) which now represents the multilateral minimum standard to combat tax treaty abuse. The new rule provides that: “notwithstanding the other provisions of this Convention, a benefit under this Convention shall not be granted in respect of an item of income or capital if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit in these circumstances would be in accordance with the object and purpose of the relevant provisions of this Convention” .

The article assesses the impact of the PPT on future tax treaty disputes. Further, Professor Danon argues in particular that while the PPT certainly permits a purposive interpretation, it may not be used to build into tax treaty law additional requirements that were never intended.  This holds in particular true as regards the notion of “resident of a Contracting State” under art. 4 OECD and UN MCs. Finally, the author concludes by looking at the other side of the coin and wonders whether a comparable PPT should not regulate the performance by States of their treaty obligations.

This article forms part of a special issue of the IBFD Bulletin (the largest ever produced) on Tax Treaty Interpretation after BEPS and incorporating the papers of a conference organized by Professor Robert Danon and Professor Wolfgang Schön (Max Planck Institute for Tax Law and Public Finance) 

The article is available here :


Professor Robert Danon is an independent expert in international and Swiss tax law.

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