'Substance' is a widely known tax concept, especially
used in cross-border tax situations. Nonetheless the expression
'substance' does not normally appear in the actual text of
tax treaties. There, a number of other tests are used, such as
'residency', 'beneficial ownership',
'qualifying persons', 'base erosion' and
increasingly anti-avoidance articles such as a 'general
purpose' tests. In addition, modern tax treaties increasingly
contain a 'general anti-avoidance rule' (GAAR).
In my eighth consecutive contribution to the Euromoney
Corporate Tax Handbook I will show that there are nonetheless
a number of connections between the official treaty tests used to
ensure tax payers qualify for the reduction of foreign withholding
(w/h) taxes and the unofficial 'substance' test which is
increasingly employed by the revenue services of the world.
