PhD defence L.C. (Loes) van Hulten

Dissertation in short:

Legal entities are usually not fully autonomous but are part of a larger economic unit. There is often a certain connection with other legal entities, for instance if a legal entity holds all or part of the shares in another legal entity. In principle, a legal entity is taxed separately from its shareholders. In OECD MTC based tax treaties, the starting point is also that each individual legal entity must be considered for the application of the treaty (separate entity approach). In treaty relations, deviation from the principle that entities in a group should be treated as separate entities is exceptional.

The legal approach taken for taxation purposes does not align with economic reality and does not seem to fit in today's internationally oriented world: it leads to double taxation and offers opportunities for tax avoidance. A multitude of ad hoc rules have been implemented in trying to solve this tax issue, for instance at the level of tax treaties. But still, the single legal entity is the starting point for these amendments and so-called solutions. This approach has created a complicated and fragmented system. This PhD addresses whether, from the perspective of the aim and purpose of the OECD MTC, the separate entity approach for the application of treaty rules in the OECD MTC should be replaced by a group approach. If this question is answered in the affirmative, the subsequent question is what this would mean for the treaty rules.