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The Concept of a Collective Investment Vehicle in the OECD Model Tax Convention - The requirements for tax treaty benefits

Veldhuis, José LU (2012) HARN60 20121
Department of Business Law
Abstract
Nearly US$25 trillion is currently invested through Collective Investment Vehicles (hereinafter: “CIVs”) worldwide. CIVs calculate net asset values (hereinafter: “NAV”) on a daily basis, since such values are the basis for subscriptions and redemptions. In calculating net asset values, a CIV must take into consideration any withholding tax benefits by applicable tax treaties. CIVs require certainty regarding their entitlement to treaty benefits The aim of this thesis is to examine the concept of a CIV as established in the 2010 OECD Commentary on the OECD Model Tax Convention and to present the requirements investment funds need to fulfil to qualify as a CIV for tax treaty benefits in its own right. This study establishes that there are... (More)
Nearly US$25 trillion is currently invested through Collective Investment Vehicles (hereinafter: “CIVs”) worldwide. CIVs calculate net asset values (hereinafter: “NAV”) on a daily basis, since such values are the basis for subscriptions and redemptions. In calculating net asset values, a CIV must take into consideration any withholding tax benefits by applicable tax treaties. CIVs require certainty regarding their entitlement to treaty benefits The aim of this thesis is to examine the concept of a CIV as established in the 2010 OECD Commentary on the OECD Model Tax Convention and to present the requirements investment funds need to fulfil to qualify as a CIV for tax treaty benefits in its own right. This study establishes that there are six requirements that need to be fulfilled: a fund needs to be (1) widely held, (2) hold a diversified portfolio of securities (3) is subject to investor-protection regulation in the country where it is established and qualifies as an (4) person, (5) resident of one of the contracting States and (6) beneficial owner of the income it receives. These requirements are compared with two forms of Dutch investment vehicles to show the difficulties for investment vehicles to obtain tax treaty access.
The OECD tried to establish a concept which makes it clear which requirements investment vehicles need to fulfil in order to qualify as a CIV for tax treaty benefits in its own right. The various OECD Member States have different forms available for investment vehicles, different tax rules or special regimes available for investment vehicles. It is difficult to find an overall concept for these funds in order to provide all the funds with the same tax treaty benefits. (Less)
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author
Veldhuis, José LU
supervisor
organization
course
HARN60 20121
year
type
H1 - Master's Degree (One Year)
subject
keywords
taxation, collective investment vehicle, OECD, OECD Model Tax Convention, the Netherlands, investment vehicles
language
English
id
2543911
date added to LUP
2012-06-21 14:27:20
date last changed
2012-06-21 14:27:20
@misc{2543911,
  abstract     = {Nearly US$25 trillion is currently invested through Collective Investment Vehicles (hereinafter: “CIVs”) worldwide. CIVs calculate net asset values (hereinafter: “NAV”) on a daily basis, since such values are the basis for subscriptions and redemptions. In calculating net asset values, a CIV must take into consideration any withholding tax benefits by applicable tax treaties. CIVs require certainty regarding their entitlement to treaty benefits The aim of this thesis is to examine the concept of a CIV as established in the 2010 OECD Commentary on the OECD Model Tax Convention and to present the requirements investment funds need to fulfil to qualify as a CIV for tax treaty benefits in its own right. This study establishes that there are six requirements that need to be fulfilled: a fund needs to be (1) widely held, (2) hold a diversified portfolio of securities (3) is subject to investor-protection regulation in the country where it is established and qualifies as an (4) person, (5) resident of one of the contracting States and (6) beneficial owner of the income it receives. These requirements are compared with two forms of Dutch investment vehicles to show the difficulties for investment vehicles to obtain tax treaty access.
The OECD tried to establish a concept which makes it clear which requirements investment vehicles need to fulfil in order to qualify as a CIV for tax treaty benefits in its own right. The various OECD Member States have different forms available for investment vehicles, different tax rules or special regimes available for investment vehicles. It is difficult to find an overall concept for these funds in order to provide all the funds with the same tax treaty benefits.},
  author       = {Veldhuis, José},
  keyword      = {taxation,collective investment vehicle,OECD,OECD Model Tax Convention,the Netherlands,investment vehicles},
  language     = {eng},
  note         = {Student Paper},
  title        = {The Concept of a Collective Investment Vehicle in the OECD Model Tax Convention - The requirements for tax treaty benefits},
  year         = {2012},
}