Plain meaning
Using an entity, structure, or jurisdiction mainly to access tax treaty benefits that would not otherwise be available.
Also called
treaty abuse
Key points
- Treaty shopping often involves routing income through a treaty country to obtain reduced withholding tax or other treaty benefits.
- Modern treaties and the multilateral instrument include anti-abuse rules to deny benefits in inappropriate cases.
- Beneficial ownership, substance, residency, and commercial purpose can all matter.
- A structure can be challenged even if it technically fits some treaty wording.
Why it comes up
Treaty-shopping concerns drive anti-abuse rules such as the principal purpose test and limitation-on-benefits provisions.