Approval of the Multilateral Convention which will change thousands of bilateral tax treaties


Yesterday, November 24th, more than one hundred States approved the so-called “Multilateral Convention” in order to amend bilateral tax treaties. This “Multilateral Convention to implement tax treaty related measures to prevent base erosion and profit shifting”, to be signed in June 2017 by the States that have approved, is the culmination of the work carried out in relation to action 15 of the BEPS Action Plan, a project of the OECD aimed at fighting against tax avoidance and aggressive tax planning. 

The effective entry into force of this Multilateral Convention will depend on the processes that must be followed by the different signatory States for its signature, ratification and approval by Parliament, as the case may be.

This Multilateral Convention covers many issues and, to a certain extent, implements the recommendations relating to the different actions of the BEPS Action Plan (e.g., hybrid instruments and entities, international tax transparency, permanent establishment, etc.), although he measures introduced to prevent treaty shopping, which were already announced in the document prepared in relation to Action 6 (“Prevent treaty abuse”), have been the focus of special discussion and interest. In this regard, a clause limiting benefits (“LOB” - “Limitation On Benefits”) and a clause on the principal purpose (”PPT” – “Principal Purpose Test”), have been introduced, according to which the benefits of a tax treaty will not apply where the main purpose of a person, entity or transaction is precisely to attain the benefits of that treaty.

Now it will be necessary to analyze in detail the content of the Multilateral Convention (48 pages) and of the Explanatory Statement on it (86 pages) and evaluate their impact on international investment structures and transactions, both those already existing or in the process of being implemented, and any which may be carried out once the Convention has taken effect.

We are attaching the link to the OECD webpage where you can access the wording of the Multilateral Convention and the Explanatory Statement (official texts in English and French):


  • Share in LikendIn
  • Share in Facebook
Related practice areas