A Study on the Interpretation and Limitations of the Concept “Place of Effective Management” as laid down in Article 4(3) of the OECD Model Tax Convention

The notion of "corporate residence" in terms of Article 4(1) of the OECD Model Tax Convention on Income and on Capital is fundamnetal to the application of the provisions of the double tax treaties. Of particular importance is the interpretation of the concept "place of effective management" in terms of Article 4(3) of the Model Tax Convention, with its purpose to solve any dual residence problems which may arise pursuant to reliance on domestic law by virtue of Article 4(1). Following a lack of consistency in interpretation of the concept in treaty practice, this work explores the two main approaches to the interpretation of "place of effective managment" by different Members States. Analysing the concepts "central management and control" and "place of management", as evidenced by decisions of the domestic courts and academic literature on the subject. The work concludes that the current tie-breaker, which is of such fundamental relevance to the interpretation and application of tax treaties in practice, is in dire need of review.