Immovable property companies as defined in Article 13(4) of the OECD Model

Art. 13(4), added in 2003 to Art. 13 (Capital gains) of the OECD Model Tax Convention, deals with the alienation of shares deriving more than 50% of their value from immovable property situated in a contracting state. After considering the nature and purpose of Art. 13(4), this article examines various aspects of the provision, including (among others): shares deriving value from immovable property, the definition of immovable property, determining the sources from which the shares derive their value, when the 50% test must be satisfied, and the compatibility of the "deriving value" test with the purpose of Art. 13(4).