Nature and purposes of double taxation agreements and the issues of interpretation to which they may give rise
Double Taxation Agreements (DTAs) are predominantly bilateral in nature. They are concluded on international level under international public law and thus on international level guarantee that they will become a part of domestic law of contracting states after their ratification. There are two ways how contracting states incorporate DTAs into their domestic legislation: Direct effect incorporation does not require any additional legal procedures, and DTA automatically becomes a part of domestic legislation right after its ratification (the USA, France, Switzerland, Luxemburg). In some jurisdictions a legislative act is required (Austria). Indirect effect incorporation needs special legislation for incorporation of DTA into its domestic law system (the UK, India). DTAs override domestic legislation, they prevail over internal laws and regulations. There are three main models of DTAs: The US Model Treaty (updated in 2016) is used by the USA in negotiations with other states, with inclusion of citizenship and focus on limitation of benefits. The UN Model Treaty (updated in 2017) is used by developing countries, allocates more taxing rights for source countries. ...