Tax treaties and most-favoured-nation treatment, particularly within the European Union

Tax treaties are negotiated on the basis of the particular economic and sometimes political relationship between the contracting states, and the benefits therefore often vary from treaty to treaty. The question arises whether a resident/national of a third state may claim from a contracting state the benefits of a tax treaty that is more favourable than the treaty concluded by the third state and the contracting state concerned. In other words, the issue is whether states are obliged to afford most-favoured-nation (MFN) treatment regarding treaty benefits. The obligation to grant MFN treatment to non-residents/non-nationals may be based on a number of different grounds. This article discusses these options and their impact on treaty benefits. The article first considers whether and to what extent international tax law and international trade law oblige states to afford MFN treatment regarding treaty benefits. The article then examines the position of EC law and the recent decision of the European Court of Justice in the "D" case.