Double tax treaties

What are double tax treaties?

A double tax treaty, agreement or convention (referred to here as DTTs) is:

1. •

   an agreement

2. •

   between two states (known as bilateral agreements) or, more rarely, between more than two states (known as multilateral agreements)

3. •

   usually to deal with:

   1. ◦

      the allocation of taxing rights between the two (or more) states (known as contracting states) over income and gains (and in certain DTTs other areas such as estates on death), and

   2. ◦

      the prevention of avoidance and evasion of tax cross-border

The majority of DTTs are based on one of the international model conventions produced by:

1. •

   the Organisation for Economic Co-operation and Development (OECD)

2. •

   the United Nations (UN), or

3. •

   the US

DTCs are generally structured in a similar way in three main parts:

1. •

   the first dealing with key definitions and the scope of the DTT, ie which people and taxes are covered by it

2. •

   the second, main, part, dealing with specific rules for certain types of income and gains, eg how to deal with dividends paid from one contracting state to the other, and

3. •

   the