Applicability of bilateral tax treaties in triangular cases – Part 1

The aim of this article is to identify possible scenario’s of triangular cases. Often, situation arises in which more than two states are involved in the transaction and exiting tax treaties are not able to resolve the unintended consequences that can arise. Few reasons for this seems to be –

• Tax treaties generally don’t account for the results arising under other tax treaties, such as an allocation of residence or the distribution of taxing rights
• PE concept though was incorporated to protect source base concept yet at times it appears as a hybrid between source and residence concept

Broadly, triangular cases can arise in following situations –

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