"ON PAPER" RESIDENTS WITH NO SUFFICIENT NEXUS TO
SWITZERLAND NOT ELIGIBLE FOR TREATY BENEFITS
A recent decision, involving Starr International Company
("Starr"), provides insight into what a court may view as
relevant in deciding a treaty shopping case.1 The
taxpayer, Starr, was located in Bermuda until approximately 2004,
when it relocated to Ireland. Its ultimate (indirect) beneficial
owner was a New York charitable foundation. In 2006 – roughly
a year after relocating to Ireland – Starr relocated to
Switzerland, claiming that Ireland was not amenable to its
charitable objectives and its assets were not sufficiently shielded
from litigation in Ireland.
Starr was the largest shareholder of A.I.G., a U.S. corporation
from which it regularly received dividends. In 2007, Starr filed a
request for treaty benefits under paragraph 6 of Article 22 of the
U.S.-Swiss Double Taxation Treaty, to obtain the benefit of a lower
dividend tax rate. However, the I.R.S. rejected
