ALFI responded to the OECD Public Revised Discussion Draft “BEPS Action 6: Preventing Treaty Abuse” dated 22 May 2015.
ALFI has taken note of the OECD Revised Discussion Draft “BEPS Action 6: Prevent Treaty Abuse” dated 22 May 2015. This follows a previous consultation “Follow up Work on BEPS Action 6: Preventing Treaty Abuse” to which ALFI responded on 9 January 2015 (click here to access the previous response). These two consultations must be read in conjunction with the report “BEPS Action 6: Preventing the Granting of Treaty Benefits in Inappropriate Circumstances”.
ALFI’s response addresses the situation of collective investment vehicles (“CIVs”) being widely-held, diversified, and subject to investor-protection regulation in the country of establishment of the CIV, as previously defined by the 2010 OECD report on treaty eligibility for investors in CIVs and section A of the Follow-up Discussion Draft relating to the limitation-on-benefits (LOB) provision and treaty entitlement.
ALFI again takes the view that CIVs set-up as UCITS or non-CIVS with similar characteristics should automatically qualify as resident under article 1 of the OECD Model Tax Convention as well as for the LOB rule. CIVs and UCITS are principally set up for genuine commercial reasons and given their economic characteristics it is reasonable to conclude that CIVs cannot, in principle, be effectively used for treaty shopping.
Finally, ALFI also suggests to include a statement that Contracting States are encouraged to consider that UCITS and comparable non-CIVs will not be considered as creating opportunities for treaty shopping.
You may access ALFI’s response here.