'This article argues that application of beneficial ownership test in Articles 10 to 12 of the OECD Model Convention is not a straightforward question of legal or economic approach. Rather, it is a matter of balance between the two that simultaneously ensures legal certainty and does not countenance blatant treaty shopping. Accordingly, the article first explores the legal basis and main drawbacks of the two approaches when applied irrespective of one another. Basing on this analysis, the author advocates a targeted hybrid approach which is to be regulated by the relative abusiveness of the tax structure in question. The hybridity is manifested through the reliance on the economic approach as an exception to the legal approach in egregious cases, i.e., targeted cases. It is submitted that the relevant threshold of abuse can be determined on the basis of the 2014 update to the OECD Commentary on beneficial ownership. This conceptualization cuts through the ostensible inconsistencies of the contemporary jurisprudence and reveals the implicit public rationale guiding actions of tax authorities and court decisions'.
Intertax